Nokia sank 18 percent Thursday after forecasting a wider second-quarter operating loss from handsets and saying it will cut as many as 10,000 jobs as it cedes market share to Apple’s iPhone and Samsung devices. After wiping out about $100 billion in market value, Finland-based Nokia trades at a 38 percent discount to its net assets, the least expensive on record, according to data compiled by Bloomberg dating to 1995.
Once Europe’s most valuable company, Nokia is losing money as it tries to rebuild the smartphone business around Microsoft’s Windows Phone software and after failing to sell an unprofitable equipment venture with Siemens. With the lowest price-sales multiple among communications-equipment makers, cash and short-term investments exceeding its $8.6 billion market value and more than 10,000 patent families, Nokia could attract Microsoft, said Falcon Point Capital. It may even be cheap enough to lure buyout firms, Avian Securities said.
“The key question is, can they do something to turn this into a growth business again?” said Michael Mahoney, senior managing director at Falcon Point. “If they can just make it grow, even a little bit, it’s very cheap.”
“This is a great company and we’re going to build on our strengths in brand, scale” and intellectual property, said Doug Dawson, a Nokia spokesman. “We think we have the assets for growth.”
Moody’s Investors Service became the last of the three major rating companies to cut Nokia’s debt to junk.
Nokia started out as a wood-pulp and paper company in 1865 before expanding into rubber, electronics and eventually telecommunications. Its market capitalization, which exceeded 300 billion euros ($380 billion) in 2000, has plummeted more than 90 percent since the iPhone was introduced five years ago, valuing it at $8.6 billion as of Thursday.
The world’s largest handset maker for 14 years, Nokia’s market share has been gouged in recent years by Apple and device makers such as Samsung that use Google’s Android system, the fastest-growing major smartphone platform. Samsung earlier this year overtook Nokia for the top spot in mobile phones overall.
Nokia, which hired Microsoft’s Stephen Elop as chief executive officer in 2010 to halt the slide, last year adopted Microsoft’s Windows Phone, ditching its own smartphone software in a bid to recapture market share.
Nokia’s share of smartphone shipments fell to 7.8 percent in the first quarter, according to International Data.
“Any company that goes through these kinds of massive tech discontinuities and competitive changes, it’s death by a thousand cuts,” said Adnaan Ahmad, an analyst at Berenberg Bank in London.
Nokia cut its earnings forecast for the second time this year and added 10,000 job cuts to more than 10,000 announced in the handset division.
“This is harder than we thought and we’re having to make deeper changes,” Elop said on a conference call.