Nokia’s Life After the Phones

According to a MarketsandMarkets report Location Based Services (LBS) Market  — Worldwide Forecasts and Analysis (2014-2019), the LBS market is expected to be worth $39.87 billion by the year 2019. Another researcher Visiongain had estimated the market to be worth $10.3 billion in 2013.

Nokia’s Financials
Nokia’s (NYSE: NOK) first quarter revenues fell 15% over the year to $3,688 million, significantly short of the Street’s projections of $3,987 million. However, EPS of $0.06 was better than the market’s expected EPS of $0.04 for the quarter.

By segment, revenues from solutions and networks segment fell 17% to $3,223 million. Revenues from HERE mapping service fell 3% to $290 million and from their advanced technology segment grew 7% to $181 million. This was the first quarter after Nokia completed the sale of their phone segment to Microsoft.

Nokia’s New CEO
Nokia also announced the much anticipated ascension of Mr. Rajeev Suri to the post of their CEO. Mr. Suri has been with Nokia for the last 20 years and was recently responsible for driving Nokia’s Networking Segment to profits through aggressive cost control and divestment strategies. There is much riding on his shoulders as Nokia’s performance has slipped significantly in the last few years. Nokia was once the leading mobile phone seller in the world, but lack of innovation and the ability to keep up with the changing demands has forced them to sell off their phone segment.

Some of the first moves by the new management include a massive capital distribution plan. The recent sale of the phone division has got Nokia cash of €5.4 billion (~$7.5 billion). Nokia plans to distribute €3 billion (~$4.2 billion) to its shareholders through dividends and share buy-back programs.

Nokia’s Mapping Focus
Nokia is now focusing on newer technologies, and during the recent quarter, has made several acquisitions in the global mapping space to strengthen their HERE offering. Earlier this month, Nokia announced the acquisition of Desti, a travel planning app. Desti is a smart travel app that uses its artificial intelligence to deliver to its users search results that are best suited to their current needs in a friendly dialogue format. It uses descriptions and reviews of locations to add context to searches. It was developed by SRI International, the company mostly known for the development of Siri. Terms of the deal were not disclosed.

Nokia also bought Seattle-based predictive analytics company Medio Systems for HERE. Medio is a well-known company in the field of real-time predictive analytics. Nokia plans to leverage Medio’s technology to deliver maps and services personalized to the user’s choices by adding content such as restaurant recommendations, route information based on weather conditions, driving patterns, and even customized offerings for business enterprises.

Nokia’s new management has not lost its sight of the Networking and Solutioning Segment (NSN). They believe that the mobile broadband opportunity will be worth $95 billion next year and Nokia wants to become a leader in this segment by the year 2016. As part of this effort, Nokia recently released a new group called the Security division. While the group will remain a part of the NSN segment, it will be responsible to provide advanced mobile security services within the Mobile Broadband services.

Nokia’s stock is trading at $7.75 with a market capitalization of $28.78 billion. It touched a 52-week high of $8.35 earlier this month.