Nokia updates markets on Microsoft risks

Nokia today provided more colour on its high-profile deal with Microsoft, claiming that it will take until 2013 for Windows Phone-powered devices to make up the majority of its smartphone portfolio. In its Form 20-F 2010 report, filed with the US Securities and Exchange Commission this morning, Nokia stated that “we expect the transition to Windows Phone as our primary smartphone platform to take about two years.” It added that while Microsoft will continue to license Windows Phones to its rivals, Nokia expects the deal to enable “opportunities to innovate and customise on the Windows Phone platform, such as in imaging… with a view to differentiating Nokia smartphones from those of our competitors who also use the Windows Phone platform.”

Nokia said it intends to take Windows Phones to “a broader range of price points, market segments and geographies.” The Finnish firm reiterated its support of Symbian throughout this process. “This strategy recognises the opportunity to retain and transition the installed base of approximately 200 million Symbian owners to Nokia Windows Phone smartphones over time,” added the report. “We expect to sell approximately 150 million more Symbian devices in the years to come, supported by our plan to deliver additional user interface and hardware enhancements.” It also added that it still intends to offer its first MeeGo-powered device this year.

Other areas of interest in the report included a detailed list of ‘risk factors’ emanating from the Microsoft deal (which has not yet been signed) and information on management pay. New CEO (and ex Microsoft exec) Stephen Elop is to be paid more than US$6 million in a one-off compensation for joining Nokia. According to the report, he had an annual total gross base salary, as of 31 December 2010, of EUR1.05 million. As compensation for lost income from his prior employer, which resulted due to his move to Nokia, Elop also received a onetime payment of EUR2.3 million in October 2010 and is entitled to a second payment of US$3 million in October 2011. “In addition, relating to his move to Nokia, Mr. Elop received a onetime payment of EUR509,744 to reimburse him for fees he was obligated to repay his former employer,” notes the report. “He also received income of EUR312,203, including tax assistance, resulting from legal expenses paid by Nokia associated with his move to Nokia.” Elop's annual base salary of EUR1.05 million (before bonuses) is below the EUR1.23 million base salary of his predecessor Olli-Pekka Kallasvuo, who was sacked last year. The document shows that Mr. Kallasvuo was paid EUR7.2 million up to his departure on Sept. 20, 2010, including severance pay and a bonus together valued at EUR4.6 million. However, he lost out on more than EUR10 million in pension payments and EUR3.9 million in stock and options. His 2009 payment was nearly EUR8 million.

Source