Tomahawk, WI 11/20/2013 (BasicsMedia) –  Nokia Corporation (ADR)(NYSE:NOK)’s shareholders on Nov. 19 voted in favor of the bid to sell off the company’s loss making handset business to the software giant Microsoft. The reason the Finnish tech icon offered its mobile business division for sale was due to its late entry into the smartphone market, making it difficult for NOK to compete against entrenched forces such as Apple Inc and Samsung Electronics. Due to the cutthroat competition in the industry Nokia Corporation (ADR)(NYSE:NOK)  failed to see profits in this unit and selling it off appeared to be one of the few options for the company.

In letting go of its mobile unit, the 150 years old company may have lost a brand but it has gained big value for its investors in this transaction. I think investors should look at it differently, that it is never easy for a company to sell its loss-making business for a profit as Nokia Corporation (ADR)(NYSE:NOK) has managed with its mobile business unit. Look at Alcatel-Laurent, the company is struggling with a fast declining telecoms equipment business yet no bids are coming along. In this regard, NOK’s former CEO, Stephen Elop under whose tenure the company negotiated the deal with Microsoft deserves some praise for helping the company dumb a poorly performing business at a profit.

Reasons NOK mobile was better off sold than retained

Some shareholders have vented their anger at Elop for what they believe was management blunder leading to the sell of NOK’s iconic brand. However, what seems to have escaped those blaming the former CEO is that he actually had very few options at the time of the decision. Nokia Corporation (ADR)(NYSE:NOK) was bleeding money through the mobile business considering that from the peaks of 40% market share in 2007, the company had fallen to below 14% in the global market share lately. Also, from shares trading above 65 euros in 2000, the company’s stock had slumped to 1.33 euros last year because it was fast losing competition to the giants Apple and Samsung in the smartphone market.

Now with approval of the sale, NOK is looking at bagging more than $7.4 billion. This is a financial windfall that the company can now use to improve its remaining businesses. For a company like Nokia Corporation (ADR)(NYSE:NOK) which has reinvented itself many times in the past having started out as a paper mill, there is no doubt the cash coming from the sale of the unit and license lease to Microsoft will help it regain the much needed investment-grade status.

NOK now stands in good grounds to reintroduce dividend

When the going got tough for NOK, the company needed to improve its cash reserve and last year halted annual dividend payment to shareholders. This is now set for reversal to the 148 year tradition of annual payment. The company is also poised to return a lot of cash to shareholders in buyback program.

I think that in all fairness, NOK has gained big in selling its mobile division at a huge profit to Microsoft. Favorable investment ratings of the company are now expected from the credit rating agencies and these will help renew interest in the stock. At around $7.80 per share, NOK has come from far and things are even looking brighter for the company which means that it could close $9 per share on the browsers by year-end.

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