FINNISH mobile phone giant Nokia plans to axe its annual dividend for the first time in more than 20 years to shore-up its cash position as it battles falling sales.
The company, which has fallen a long way behind market leaders Samsung and Apple in the smartphone race, said yesterday that the suspension of the dividend, which cost it €750 million (£635m) last year, would give it “strategic flexibility”.
The move came despite the firm returning to profit with a €202m gain for the last quarter of 2012, although revenues fell 20 per cent.
Chief executive Stephen Elop, who was hired from Microsoft in 2010, said the company was “still moving through a very challenging transition”, but had “removed the cloud of liquidity concerns”.
Nokia ended the year with net cash of €4.4 billion, down 22 per cent on a year earlier, but up on the previous quarter and above the market estimate of €3.4bn.
The improvement was mostly due to a turnaround at its networks joint venture with Siemens.
The company has also been making better use of its portfolio of technology patents, winning significant royalty payments from other companies.
Earlier this month, Nokia flagged a return to underlying profitability on major cost-cutting and stronger sales of its latest Lumia smartphones.
Elop is under intense pressure to show he made the right decision in February 2011 to drop Nokia’s own operating system in favour of Windows Phone.
He has said it would take two years for a successful transition, and that period is almost over.
“It is too early to say that they have definitely made it,” said Alandsbanken analyst Lars Soderfjell, though Nokia’s cash flow was stronger than he had expected.
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