As a part of its cost cutting initiative, Nokia Siemens Networks
- a 50-50 joint venture between
Nokia Corporation
(
NOK
) and
Siemens AG
(
SI
) - has sold some of its internet protocol television (IPTV) assets
to global consulting and outsourcing group
Accenture Plc
(
ACN
). The deal value was not disclosed.
IPTV transmits and broadcasts television and multimedia content
using the internet protocol technology. It generally helps
subscribers watch their favorite TV programs, video on demand (VOD)
services on their tablets or smartphones, as well as catch up the
television shows later in their personal computers.
Integrating Nokia-Siemens' IPTV assets with Accenture's
over-the-top TV software will help the Dublin-based company offer
video services at a lower cost. Nokia-Siemens is already in talks
with Belgium's largest telecommunication company Belgacom to sell
several IPTV assets as well as transferring twenty five employees
to them. This marks the end of Nokia Siemens' IPTV business and it
is expected that seventeen employees of the company would join
Accenture after the acquisition.
For some time now Nokia has been having a tough ride in almost
all fronts. Despite teaming up with
Microsoft Corporation
(
MSFT
) to develop windows based smartphones, Nokia is still far behind
its rival
Apple Inc.
's(
AAPL
) iPhone, and an array of other smartphone manufacturers using
Google Inc.
's (
GOOG
) Android platform. Even its mobile equipment manufacturing arm
Nokia-Siemens has been subjected to a huge cash
loss.
In an attempt to overcome this difficult situation and to
concentrate on its mobile broadband business, the company is
reducing its operating cost by retrenching employees and selling
its non-core business units. The company is in its final lap of
negotiations with
Ericsson
(
ERIC
),
Amdocs ltd
(
DOX
) and some private equity firms to sell its Business Support
Service (BSS) unit.
We believe selling IPTV assets is the right strategy for
Nokia-Siemens as it will help the company monetize its huge
portfolio of patents and minimize its mounting
losses.
We maintain our long-term Neutral recommendation on Nokia.
Currently, Nokia also retains a Zacks #3 Rank, implying a
short-term hold rating.
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