* Reports higher-than-expected quarterly results
* Network chief Suri to become next CEO on May 1
* Special dividend, share buybacks to total 2.25 bln euros
* Nokia says to focus on three remaining businesses
(Adds first quarter results, analyst comments)
By Sakari Suoninen and Jussi Rosendahl
HELSINKI, April 29 Finnish telecommunication
gear maker Nokia on Tuesday reported
higher-than-expected quarterly earnings and promoted Rajeev
Suri, the head of its biggest division, to lead the company
following the sale of its once-dominant phone business.
The company also announced plans to return $3.1 billion to
shareholders via buybacks and extra dividends, a move seen by
some analysts as an attempt to retain investors as it refocuses
Suri, a 46-year-old Indian national, was widely expected to
become the CEO as he helped Nokia's networks business, formerly
called NSN, turn profitable with cost-cuts and divestments.
Cost-cutting and profitable software deals helped the
networks business report a core operating profit margin of 9.3
percent in the first-quarter, well ahead of the 5.7 percent
average forecast by analysts polled by Reuters. The margin is
also expected to remain at the higher end of a 5-10 percent
target for this year, Nokia added in its earnings statement.
The unit was one of three that remained after Nokia sold its
mobile phone business to Microsoft for about 5.6
billion euros in a deal that closed on Friday.
Nokia said it would focus on growing the networks unit, as
well as its navigation and patents business, but did not give
any specific details.
"The general strategy is not very concrete, sounds like they
have just come up with a mega-trend around their three business
areas. I'd expect the units to be rather independent in the
future," said Mikael Rautanen, analyst with equity researchers
The networks business last year accounted for about 90
percent of the group's sales and Nokia has vowed to make a more
aggressive push this year to increase its global market share.
Analysts, however, say it may face challenges as higher
research and development costs give bigger, deep-pocketed rivals
such as industry leader Ericsson and Chinese telecoms
firm Huawei, an advantage.
Suri, in a video posted on the company's website, said there
was plenty of scope for expansion. "I have been with Nokia for
almost 20 years, and the opportunities ahead of us are as great
as I have ever seen," he said.
Suri, who has been with Nokia since 1995, successfully
turned around the loss-making networks unit in 2012.
"Rajeev is the right person to lead the company forward,"
Nokia Chairman Risto Siilasmaa said in a statement. "He has a
proven ability to create strategic clarity, drive innovation and
growth, ensure disciplined execution, and deliver results."
Nokia's mobile phones were its most renowned product. In a
bid to retain shareholders, the company said it would pay an
extra 1 billion euros in dividends for last year and start a
1.25 billion euros share buyback programme.
The extra dividend of 0.26 euros per share is on top of the
annual dividend of 0.11 euros for last year. The ordinary
dividend will cost the company another 400 million, or about
half of Nokia's earnings for last year.
The company has also said it would cut debt by 2 billion,
which would save it around 100 million euros in interest
"The dividend proposal is slightly smaller than expected,
but the buy-back program is quite extensive. It reflects the
management's view that the stock is valued below its
sum-of-parts," said analyst Rautanen.
Nokia said its net cash position at the end of March was 2.1
billion euros, down from 2.3 billion at the end of last year.
Had the phone-unit sale closed in the first quarter, the net
cash position would have been 7.1 billion, Nokia added.
($1= 0.7223 Euros)
(Editing by Miral Fahmy)