Nokia is scrambling to unload its luxury mobile-phone brand, Vertu, for a reported $265 million as the company tries to rebound from a tough first quarter, according to the Financial Times. Goldman Sachs has advised the Finnish phone makers to sell the brand to private equity group Permira in order to boost its growth for Q2.
The luxury Vertu phones are the most flashy candy bar phones you have ever seen -- usually made from stainless steel, carbon fiber, and titanium, with details in various leathers, gold, platinum, rubies and diamonds. And if all that bedazzling isn't enough for the person that has everything, The London Symphony Orchestra records all the Vertu ringtones. How posh.
UK-based Vertu has been an independently managed luxury subsidiary of Nokia's since 1998 and has been attaching $5,000-$250,000+ price tags to phones for quite a while.
Nokia is now looking to sell off non-essential parts of the business and accelerate cost savings as it focuses on its Windows-based Lumia smartphone platform.
Two weeks ago, Nokia reported that its quarterly sales were down to 7.4 billion euros, that's 3 billion euros less than last year's 10.4 billion euros in the first quarter a year ago. The company also reported a loss of 25 euro cents per share.
The earnings report also stated that the top sales executive Colin Giles is leaving the company.
In the report, CEO Stephan Elop pointed out that much of that loss was due to one-time restructuring costs. The company also singled out the three quarters of a billion in costs to the restructuring it did at the Nokia Siemens division, where it laid off 17,000 people earlier this year and the effect of severing 4,000 jobs in Europe and South America.
Nokia did, however, warn the public and its investors that it could fall short of its near-break-even goal but as that didn't stop the company from experiencing a 4% drop in early morning trading on the NYSE.
“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly,” Elop said in a statement. “Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges.”
Nokia experienced losses in the number of phones sold and the average price they were being sold at -- a terrible combination.
For this current quarter, Nokia said it plans to reduce its operating costs by $1 billion, compared to 2010 but still is warning the public that this quarter will also be a rough one when the earnings come out.
Nokia still has hopes to slow the slide with the its new Windows Phone 7, which launched in October. Nokia says the Windows operating system will be the main platform in its new phones, phasing out the MeeGo and Symbian platforms, considered clumsy by many operators.
Nokia has since launched several versions of Windows-based Lumia phones.
So far, Nokia has sold more than 2 million Windows-based Lumia phones in the first quarter and the company noted that it did receive $250 million in “platform support payments” from Microsoft during the quarter.
When Nokia drops Vertu, it will be saving more than the cost to create crystal sapphire displays, it is also saving money on the 24/7 concierge service and the additional 600 employees is has on its books.