Microsoft Eases Nokia’s Pain
After taking high losses on supporting the Symbian platform, Nokia (NYSE:NOK) is receiving something of a lifeline from Microsoft (NASDAQ:MSFT) who is using the company to help create its Windows Phones. In its recent earnings report, Nokia stated that its received $250 million in “platform support payments” from the software giant; the first of many payments from Microsoft that should ultimately total in the billions of dollars.
Nokia, however, has made commitments to pay Microsoft royalties on each phone it makes (since it’s using the Windows mobile operating system), which itself should eventually total within the billions of dollars. As of the moment, however, Nokia is the recipient of the cash flow.
Nokia has struggled with sales of Symbian phones, which it has outright stated have slowed much faster than it had expected. The company had hoped to sell about 150 million Symbian devices, despite having announce the transition to the Windows phone, but now says that expectation is no longer realistic. While they didn’t release new estimates, they did earmark losses for excess inventory in the fourth quarter. So far, Nokia has shipped more than 1 million Windows Phones.