According to Bloomberg , Finland-based Nokia CorporationNOK is considering options to sell its maps business (HERE).The report suggested that the company is looking to sell the unit to focus instead on its core area of strength - its wireless-network business.
People familiar with the situation, on condition of anonymity, commented that the company is also looking to improve its debt rating from "junk" on the back of the sale. As suggested in the Bloomberg report, Nokia might use the proceeds from the sale of the HERE division to buy French rival Alcatel-Lucent ALU .
Nokia, with a market cap of $29.4 billion, jumped more than 4% on Friday trading on the NYSE following rumors of the potential sale. The report further stated that Nokia has contacted Uber Technologies, the car-hailing application, apart from private-equity firms, regarding the matter. Furthermore, a group of German car makers are also supposedly interested in buying Nokia's HERE unit which is valued at approximately $2.1 billion. Bids for the transaction are expected before the current month ends.
The present value of the unit, which reported 2014 sales of €970 million and an operating loss of €1.24 billion, is much less than the approximate $8 billion that was shelled out by Nokia to buy Navteq Corp. a few years ago, in a bid to gain access to the digital maps of multiple countries.
Reports of the potential sale of the maps business are surfacing a year after Nokia sold its struggling mobile phone business to Microsoft Corp. MSFT . Following the sale of its handset unit, many analysts had suggested a lack of synergy between the maps unit and the network business.
Going ahead, we believe investors will eagerly await updates to find out whether the rumor of the said unit sale actually materializes.
Nokia presently has a Zacks Rank #3 (Hold). Qualcomm QCOM is a better-ranked stock in the wireless equipment sector with a Zacks Rank #2 (Buy).