Helsinki - Finnish mobile phone maker Nokia plans to axe its annual dividend payment for the first time in over 20 years to shore up its cash position against falling sales.
The company, which has fallen a long way behind market leaders Samsung and Apple in the smartphone race, said on Thursday that the suspension of the dividend, which cost €750m ($996m) last year, would give it "strategic flexibility".
Nokia chief executive Stephen Elop, who was hired from Microsoft in 2010 and promptly tied the company's fortunes to the untried Windows Phone operating system made by his former employer, said the company was "still moving through a very challenging transition", but had "removed the cloud of liquidity concerns".
Nokia ended the year with net cash of €4.4bn, down 22% on a year earlier, but up on the previous quarter and above the market estimate of €3.4bn, mostly due to a turnaround at Nokia Siemens Networks, its telecom equipment venture with Siemens.
The company has also been making better use of its rich portfolio of technology patent, winning royalty payments from other technology companies.
It also received $250m from Microsoft in the quarter in return for using Windows Phone.
While Nokia, which this month flagged a return to underlying profitability on cost cuts and stronger sales of its new Lumia smartphones, appeared to gain some breathing space through cost cuts, analysts said it was too early to call a recovery as it was still a long way behind smartphone rivals.Tough turnaround
Elop is under intense pressure to show he made the right decision in February 2011 to drop Nokia's own operating system in favour of Windows Phone. He has said it would take two years for a successful transition, and that period is almost over.
"It is too early to say that they have definitely made it," said Alandsbanken analyst Lars Soderfjell, though Nokia's cash flow was stronger than he had expected.
Many see the new Lumia 820 and 920, which use the latest Windows Phone 8 software, as make-or-break models for Nokia.
Nokia said it sold 4.4 million Lumia devices in the fourth quarter, but analysts estimate Nokia's market share in the high-margin smartphone business is only around 5%.
And while Apple's results overnight fell short of expectations, it still shipped a record 47.8 million iPhones in the December quarter.
"It doesn't look like Apple would start losing their volume strength in any remarkable way," said Pohjola analyst Hannu Rauhala.
Nokia shares were down 4.9% at €3.32 at 14:45. They had risen 70% over the past three months, but were also the most shorted among the euro zone's blue chips ahead of the results.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.