Nokia is Not Going Down For A Very Long Time

The most frequently discussed topic surrounding Nokia’s recent quarterly losses are that they have caused quite a dip in its cash reserves. Along with these we regularly see reports of restructuring and laying off of personnel.

Nokia lost 1.34 Billion in Q1 2012 and 826 Million in Q2 2012. Most people have been focusing on how these losses will eat away into Nokia’s reserves and leave them bankrupt within a few quarters without fully analyzing how the losses are really coming about.

Nokia Q1 2012

Nokia’s Q1 losses were 1.34 Billion

· Nokia Siemens Networks restructuring and associated costs 772 Million

· Devices and Services restructuring costs were 91 Million

· Location and Commerce restructuring costs were 10M

All this adds up to 873 Million of the 1.34 Billion loss

Nokia Q2 2012

· Nokia Siemens Networks restructuring and associated costs 190 Million

· Devices and Services restructuring costs were 108 Million

· Location and Commerce restructuring costs were 10M

All this adds up to 308 million of the 826 million loss

Nokia incurs all these expenses as a result of closing factories and offices, moving factories and offices and restructuring itself. So, basically more than half the losses incurred during the first half of the year were due to short term payments. In the long run these payments will save Nokia billions, yes you heard it right billions.

What does Nokia get from all this restructuring? Well, the restricting of Nokia Siemens Network will save the company approximately 1 Billion by 2013 and the restructuring of the Devices and Services division will save them approximately three billion by 2013. This will result in approximately 2 billion in saving for Nokia.

In other words, Nokia is spending a shit load to save themselves a shit load in the future by moving their factories from high expensive areas like Europe to low expensive areas like China.