Nokia Ditches Dividend for First Time in 20 Years

by Christopher Freeburn | January 24, 2013 9:42 am

Nokia Ditches Dividend for First Time in 20 Years

nokia storefront 630 300x200 Nokia Ditches Dividend for First Time in 20 Years[1]Finnish handset maker Nokia (NYSE:NOK[2]) announced on Thursday that it had turned a profit during the fourth quarter, but it would suspend dividend payments this year[3].

Investors didn’t like the news, sending Nokia shares down almost 8% in Thursday morning trading.

This marks the first year since 1989 that Nokia won’t pay a dividend. Last year, the company distributed $987 million in dividends even though it was facing steep losses, The Wall Street Journal noted.

Suspending dividend payments will help increase Nokia’s cash reserves, which totaled about $5.8 billion at the end of last year.

During the fourth quarter, Nokia posted earnings of $269 million, compared to the $1.4 billion loss it recorded during the same period in the prior year. That snapped a series of six consecutive quarterly losses.

However, the company posted an annual loss of $4.14 billion, more than double the $1.5 billion it lost in 2011.

Nokia’s fortunes have been boosted by strong sales of its Lumia line of smartphones[4] running Microsoft’s (NASDAQ:MSFT[5]) Windows Phone operating system.

Once the cell-phone market leader, Nokia sales tumbled in the face of competition from Apple‘s (NASDAQ:AAPL[6]) iPhone and smartphones running Google‘s (NASDAQ:GOOG[7]) Android operating system. Nokia has lately been engaged in a frantic program of asset sales and payroll cuts[8] to lower expenses.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2012/04/nokia-storefront-630.jpg
  2. NOK: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOK
  3. but it would suspend dividend payments this year: http://online.wsj.com/article/SB10001424127887323539804578261373354867616.html
  4. strong sales of its Lumia line of smartphones: http://investorplace.com/2013/01/lumia-lights-up-nokia-stock/
  5. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  6. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  7. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  8. asset sales and payroll cuts: http://investorplace.com/2012/12/more-ominous-news-at-nokia/

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