Struggling cellphone giant Nokia will sell some 500 wireless patents to U.S. firm Vringo (VRNG) in a $22-million deal as well as 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 (MSFT) to sell phones using Windows software but has so far had only limited success.
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. To halt losses, the Finnish manufacturer unveiled a massive restructuring program in June, including cutting 10,000 jobs and said it plans to divest non-core assets.
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% of income.
The value of the deal in which Nokia will divest software developer, 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.
Nokia (NOK : NYSE : US$2.93), Net Change: 0.26, % Change: 9.74%, Volume: 58,128,264