Finnish mobile phone maker Nokia plans to axe its annual dividend payment for the first time in the company's recorded history to shore up its cash position against falling sales and buy time for a turnaround.
While cost cuts and asset sales have given the struggling company breathing space to keep marketing what many call its make-or-break Lumia smartphones, analysts said it was far from a recovery and was still falling behind Samsung and Apple in the smartphone race.
Nokia has slashed one in three jobs and has sold off assets including its company headquarters under Chief Executive Stephen Elop, who was hired from Microsoft in 2010 and promptly tied the company's fortunes to the untried Windows Phone operating system made by his former employer.
"We believe we removed the cloud of liquidity concerns," Elop told reporters on a conference call.
Nokia, which earlier this month announced it had returned to underlying profitability for the first time in a year, said the suspension of the dividend, which cost 750 million euros ($996 million) last year, would give it "strategic flexibility".
Nokia said it had paid a dividend every year since 1989, but didn't have records for earlier periods in its history, which goes back over 100 years.
The company ended the year with net cash of 4.4 billion euros, down 22 percent on a year earlier, but up on the previous quarter and above the market estimate of 3.4 billion, mostly due to a turnaround at Nokia Siemens Networks, its telecom equipment venture with Siemens.
It has also been making better use of its rich portfolio of technology patents, earning royalty payments from other technology companies. It also received $250 million from Microsoft in the quarter in return for using Windows Phone.
Some analysts have said Nokia could soon take NSN public, which would secure even more cash to keep the company running. Elop said all options were on the table for NSN's future.
LOST IN TRANSITION
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.
"They have had two transition years now, and this year will be yet another one. The ramp-up continues. It has been way too slow," said analyst Mikael Rautanen from equity research firm Inderes.
Some investors have said Elop will need to