Nokia Buying Symbian

HELSINKI (Reuters) – Nokia Corp (NOK1V.HE: Quote, Profile, Research, Stock Buzz) is buying out other shareholders of handset software firm Symbian Ltd and will make the software royalty-free to respond to new rivals such as Google (GOOG.O: Quote, Profile, Research, Stock Buzz).

Symbian's software is used in two-thirds of smartphones — handsets with computer-like capabilities — and 6 percent of all cellphones, but new platforms such as Google's Android and Apple's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone could challenge its dominance.

“The move's a shrewd response to growing threats from other providers of mobile phone software,” said Geoff Blaber of UK-based research firm CCS Insight, citing the open-source LiMo Foundation as well as Google and Apple.

Currently, Symbian's closest rival is Microsoft's (MSFT.O: Quote, Profile, Research, Stock Buzz) Windows Mobile operating system.

“This puts a lot of pressure on Microsoft right at a time when they are trying to really push into the consumer space,” said Gartner analyst Carolina Milanesi.

“Lower price points are what operators and the market need to push smartphone adoption and dropping royalty is going to help that. For operators this offers a good alternative to Android,” she said.

Nokia, which makes 40 percent of all phones sold globally, will pay 264 million euros ($410 million) for the 52 percent of British-based Symbian it does not already own, it said on Tuesday.

The Finnish company also said it and other top cellphone makers along with operators AT&T (T.N: Quote, Profile, Research, Stock Buzz), NTT DoCoMo (9437.T: Quote, Profile, Research, Stock Buzz), Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) and chip makers Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) and STMicroelectronics (STM.PA: Quote, Profile, Research, Stock Buzz) had formed the Symbian Foundation to develop the software further.

Nokia will contribute Symbian and its S60 software assets to the foundation, while other members will put in their UIQ and MOAP software to create a new joint Symbian platform in 2009.

“It offers us an opportunity to innovate faster on a bigger, united, more widely accepted platform,” Kai Oistamo, head of Nokia's devices business, told Reuters. “It also enables us to deliver new products, we believe, faster to the market.”

Nokia said Sony Ericsson (6758.T: Quote, Profile, Research, Stock Buzz), Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz), Panasonic (6752.T: Quote, Profile, Research, Stock Buzz) and Siemens (SIEGn.DE: Quote, Profile, Research, Stock Buzz) had accepted the offer for their Symbian stakes, and it also expected Samsung Electronics (005930.KS: Quote, Profile, Research, Stock Buzz) to accept.

“The biggest surprise is that Nokia gets full ownership all at once, and at a good price,” said Karri Rinta, analyst at Handelsbanken.

“This was a logical move. There was pressure for Nokia to increase its holding, especially since there were owners such as Panasonic and Siemens who were there for historic reasons.”

Nokia said it expects the deal to be completed by the end of this year, and to weigh on earnings in 2009.

On reported basis, Nokia expects the acquisition to reach break even in 2010, and boost earnings in 2011. On a cash basis, it expects the earnings boost from 2010.

Shares in Nokia were up 0.1 percent at 15.70 euros at 0848 GMT, broadly in line with the DJ Stoxx European technology shares index .

By Tarmo Virki

(Additional reporting by Sakari Suoninen and Rauli Laitinen in Helsinki, and Georgina Prodhan in Frankfurt; Editing by Quentin Bryar)
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peHUB Note: Symbian raised around $29 million in a 2002 VC round from firms like Motorola Ventures, Matsushita Electric Corp. of America and Sony.