Finnish PM rules out Nokia rescue package
Local heroes must sink or swim
The Finnish Prime Minister Jyrki Katainen has ruled out any government rescue package for ailing Nokia, saying the company is on its own.
If any Finnish company is too big to fail, it would have been Nokia. At its height, the company was responsible for a quarter of all Finnish exports and accounted for nearly 5 per cent of the Finnish economy. Nowadays, however, that's down to less than 1 per cent.
Many in the financial markets were betting on the politicians to save the day, but the PM explained that that's not how they do things down Helsinki way.
"This is not our business. We are developing Finland into a country where companies can do well, but this is not the way of support along which the government will go," he told Reuters.
Katainen made his comments during a visit to the Finnish town of Salo, home to a long-established Nokia factory that employs about 10 per cent of the local workforce. It's being shut down as part of Nokia CEO Stephen Elop's restructuring plan announced this month, which will see the workforce cut by over 10,000 people and many senior management jobs lost.
The news came as Microsoft released the first concrete details of its Phone 8 operating system that Nokia is tied to. Microsoft has recoded the platform so that it shares kernel features with Windows 8, which is good for integration but bad news for smartphone vendors, since upgrading existing handsets is impossible.
True, Redmond is releasing Phone 7.8, which gets you the same start screen as Phone 8 but little else. But that isn't going to help Elop's inventory of unsold Lumia handsets that are going to be outdated when the new OS is released this autumn.
Research this month showed that Nokia's shipments for the last quarter fell by 40 per cent as Apple and Samsung slurped up the lion's share of the market. It all makes Microsoft's predictions that it will be able to transfer Nokia's Symbian massive user base onto Windows Phone look a tad optimistic.
Nokia's shares fell slightly at the news that there would be no government help, although at $2.40 a share there's not much further to fall. In 2000 the company's shares peaked at nearly $59, and since Elop joined the company from Microsoft – the first non-Finn to lead Nokia in 150 years of operation – Nokia's share price has fallen by three quarters, and Moody's has already relegated its stocks to junk-bond status. ®