Rajeev Suri Reuters

Microsoft's New Mobile Unit Posted $424 Million Loss in Final Quarter with Nokia

Oops they did it again

With the sale of Nokia's devices and services businesses to Microsoft now complete, Nokia has posted an interim financial report for the first quarter of 2014, the last quarter during which these businesses weighed on its results. And these "discontinued operations," as they're called in the report, posted yet another loss.

Nokia's discontinued operations lost $452 million on revenues of $2.7 billion, with the latter figure a 30 percent drop from the same quarter a year earlier. These numbers explain why Nokia was forced to sell: It hasn't been able to run its devices-related business profitably for several years. But now Microsoft will need to absorb these losses as part of a broader Devices business that also includes Surface and Xbox, two other loss leaders.

You may recall that Microsoft and Nokia had originally planned to close the acquisition by the end of March 2014, but Chinese antitrust regulators forced a month-long delay. That delay cost Nokia to the tune of billions of dollars, at least on paper.

"If the transaction to sell to Microsoft substantially all of our Devices & Services business would have closed before the end of the first quarter 2014, Nokia would have ended the quarter with net cash of approximately $10 billion." But because the transaction closed after the quarter ended, the firm finished Q1 2014 with just $2.9 billion in net cash.

Nokia also reported some new last minute changes to its deal with Microsoft. Chief among them is that Nokia will retain the India-based mobile phone manufacturing facility that came under tax-related scrutiny when the deal was announced. For the short term, Nokia will maintain the facility and produce mobile devices under contract to Microsoft. Then it will then close the facility, which employs about 200 people.

Nokia reports that the final tally of employees that went to Microsoft is about 25,000. This is lower than the previously stated figure of about 33,000 employees.

As for Nokia, it will push forward with three core businesses: Networking, HERE, and Technologies, the latter of which will focus on mobile chipsets and licensing. The firm announced that former networking chief Rajeev Suri would become its new CEO effective May 1.

"With the closing of our transaction with Microsoft, Nokia begins a new era," Nokia chairman Risto Siilasmaa is quoted as saying in the interim report. "We are confident in our future. Nokia's vision is to be a leader in technologies which will be important in a world of billions of intelligent connected devices. With our strategic direction now set, our highly talented teams can focus fully on realizing our vision by building on Nokia's three strong businesses."

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