3 Min Read
HELSINKI (Reuters) - Struggling cellphone giant Nokia will sell some 500 wireless patents to U.S. firm Vringo and divest its Qt software business to Finnish IT services firm Digia Oyj to bolster its fast-shrinking cash reserves.
Nokia is fighting for survival after losing the smartphone war in which Apple and Samsung have gained dominance. The world's second-largest cellphone maker has linked up with Microsoft to sell phones using Windows software but has so far had only limited success.
To halt losses Nokia unveiled a massive restructuring program in June, including cutting 10,000 jobs and said it plans to divest non-core assets.
Following Thursday's deals shares in Nokia leapt and were 8.1 percent higher at 2.33 euros by 1251 GMT.
The patent deal nets Nokia $22 million, while still leaving it with one of the strongest portfolios in the wireless industry.
Vringo said it will pay cash for the patents, which cover a broad range of technologies relating to cellular infrastructure. Should the patents yield more than $22 million in revenues, Nokia will collect a further payment of 35 percent of income.
Last month, Nokia reported a 1.53 billion-euro ($1.9 billion) loss for the second quarter. It burned some 700 million euros of cash in the quarter and ended June with net cash of 4.2 billion euros.
The value of the deal in which Nokia will divest Qt software to Digia was not disclosed, but analysts estimated it was a fraction of the $150 million Nokia paid for Qt's then-owner Norway's Trolltech in 2008.
Qt software was a central part of Nokia's strategy until 2011 when it decided to swap its own smartphone software for Microsoft's Windows Phone.
"It was a big bet that got left in the cold when Nokia ditched its own software platforms for Microsoft's Windows Phone," said Geoff Blaber analyst at CCS Insight.
The software is used by more than 450,000 developers for making applications for some 70 industries, including automotive, medical, industrial automation and defense.
Shares in Digia jumped 10 percent on the deal.
"This arrangement seems like win-win as Qt will continue to develop under Digia's umbrella," said Nordea analyst Sami Sarkamies.
Up to 125 employees working on developing and licensing the software will move from Nokia to Digia, the companies said on Thursday.
Digia said it planned to make Qt available for making applications for Apple's iOS platform, Google's Android and Microsoft Windows 8. ($1 = 0.8093 euros)
Reporting by Tarmo Virki; Editing by Mark Potter and Sophie Walker