Nokia to return dividend to shareholders amid Microsoft handset deal

Nokia Oyj is near to finalizing the sale of its handset unit to Microsoft Corp., which is estimated to 7.4 billion dollars. Until the end of the week, the investors of the company may find out how much of the proceeds will be theirs. The handset deal was officially announced by the two companies in September 2013.

As much as 3 billion Euro (4.1 billion dollars) are said by Deutsche Bank AG to may be returned by Nokia to its shareholders, pledging some of it as soon as tomorrow in the form of a regular annual dividend. Nordea Bank AB considers that the payout could reach 3.7 billion Euro, and expects Nokia to announce it during the second quarter of 2014. No payment has been guaranteed by the company, though.

It is now the time for the Chairman Risto Siilasmaa to do everything in his strength in order to balance shareholder demand for cash rewards with the companys growth ambitions. Nokia could be left with insufficient funds for investments and takeovers if the payout was too generous. Markus Larsson, who works for Fondita Fund Management Co. said: “Whats required to run the business should be left in, and the excess must be distributed to shareholders. Its reasonable that the balance sheet wouldnt be left overflowing with cash.”

Nokia Oyj is said to expect gaining about 5.44 billion Euro from the divestment of the money-losing handset devision, which sale it is trying to finalize until the end of the quarter. Kai Korschelt, who is an analyst working at Deutsche Bank AG thinks such a move would help the company increase its net cash to 6.4 billion Euro.

According to the schedule, Nokia is expected to report its earnings tomorrow. It has announced that any cash the company does not need will be given to investors, but it hasnt given any more details about that. The spokesman of Nokia Oyj James Entheridge refused to make any comments before the release planned for tomorrow.

Some analysts, such as Sami Sarkamies, who works for Nordea, say that Nokia may delay its payouts to shareholders until the handset deal with Microsoft is finalized in order to minimize risks. Mr. Sarkamies explained that such a solution actually would mean no regular divided. Instead, Nokia could pay a special dividend estimated of as much as 1 Euro a share, which makes 3.7 billion Euro in total, which would be most appropriate to happen during the second quarter of 2014.

According to Bloomberg, the current share price of Nokia Oyj is 0.35% up, and its one-year return rate is 69.74% up.