The history and development of nokia corporation finance essay

Long ago, there was a excavation applied scientist named Fredrik Idestam. At 1865, he built his first wood mush factory in one of Finlands Bankss, Tammerkoski rapids. After sometime, his 2nd factory was done by Nokianvirta Rivers. By that clip, Nokias name began to look. Subsequently at 1898, Nokia moved from the wood mush concern into the gum elastic concern. This was done by, Eduard Pol? N. By go throughing the old ages, Arvid Wickstr? m started in Nokia Finnish Cable Work and electronic concerns. ( Nokia Corporation, 2010 )

In the 1930s, Verner Weckman one of the Olympic grapplers became the president of this Finnish Cable work. When the Cable work began to win in Nokia, it began to set up its first electronic section that was selling and purchasing computing machines. This electronic section produced its first electronic device which is Pulse analyser for atomic power workss. At the terminal of Nokia ‘s first century, Nokia Ab, Finnish rubber work, and Finnish overseas telegram work merged together and formed Nokia Corporation. ( Nokia Corporation, 2010 )

Nokia ‘s Corporation began to develop from the twelvemonth 1979 boulder clay 2010, from developing a traditional early phone shaper into nomadic phones with the highest options including GPRS, Internet, and many other new services. ( Nokia Corporation, 2010 )

Nokia Corporation ‘s success is resulted from cherished work of the people they work in. The Chief of Executive Officer CEO is the chief factor for this success. Nokia ‘s Corporation CEO is called Stephen Elop. He was born in Canada on December 31, 1963, and was raised in Ancaster. One of his favorite avocations is athleticss by kids. Stephen has a unmarried man ‘s grade in computing machine technology and direction from McMaster University in Hamilton, Canada. Besides he was honoured a physician of Torahs degree. ( Nokia Corporation, 2010 )

In the beginning of his calling, he served in several executive places that include main information officer. Besides, he was Chief Operating Officer of Juniper Networks, and was responsible for the merchandise ‘s groups, corporate development, planetary gross revenues and service, every bit good as selling and fabrication organisations. Furthermore, Stephen has served as a president of world-wide field operations of Adobe Systems Inc. Recently ; Stephen was a president of Microsoft ‘s Business Division and was a leading member squad that was responsible for the company ‘s overall scheme. Stephen Elop joined Nokia as President and Chief Executive Officer as of September 21, 2010. ( Nokia Corporation, 2010 )

Nokia Corporation is non a household running concern, significance that the CEO, Stephen is an foreigner but he is merely puting in the concern. Here comes the board of managers ‘ occupation, their occupation is to pull off the work in the corporation. ( Nokia Corporation, 2010 )

NOKIA Board Of Directors

Chairman Jorma Ollila

Chairman of the Board of Directors, Nokia Corporation.

Dame Marjorie Scardino

Vice Chairman of Nokia Corporation.

Lalita D. Gupte

Member of the Audit Committee

Dr. Bengt Holmstr? m

Prof. Dr. Henning Kagermann

Personnel Committee

Per Karlsson

Chairman of the Personnel Committee.

Member of the Corporate Governance and Nomination Committee.

Isabel Marey-Semper

Member of Audit Committee.

Risto Siilasmaa

Chairman of the Audit Committee.

Member of the Corporate Governance and Nomination Committee.

Keijo Suila

Member of the Personnel Committee

( Nokia Corporation, 2010 )

This board of managers are chiefly working as inside managers or directors, in which they run the concern and manage it to make the concern end. ( Nokia Corporation, 2010 )

?

Splits: Apr 16, 1998 [ 2:1 ] , Apr 12, 1999 [ 2:1 ] , Apr 11, 2000 [ 4:1 ]

Nokia Corporation Sponsored Ame

( NYQ: NOK )

After Hours: 10.80 0.08 ( 0.74 % ) 7:54PM EDT

Last Trade: 10.88

Trade Time: Oct 15

Change: 0.08 ( 0.73 % )

Day ‘s Scope: 10.75 – 10.99

52wk Scope: 8.00 – 15.89

Volume: 26,400,340

( Yahoo Finance, 2010 )

As shown from the old graph, Nokia was one of the most successful trade names in stock markets but unluckily came the economic crisis in 2009 which decrease the stock monetary value by a really big sum. And from that clip, Nokia is still seeking to last. ( Yahoo Finance, 2010 ) ?

Nokia ‘s Corporation is stock listed on 3 different stock exchanges. The stock exchange, The New York stock exchange and Frankfurt stock exchange. ( Nokia Corporation, 2010 )

In my Opinion, Nokia is one of the most successful nomadic companies globally and locally. Between its consumers, it has a good repute, ensuing a high and maximal consumer value. This is resulted from holding good quality merchandises, consumer services, and after sale services.

?

Nokia ‘s Income Statement

2008 2009

Net Gross saless 26940 20167

Cost Of Gross saless -18712 -14666

Gross Margin 8228 5501

Selling and Marketing Expenses -1393 -1403

Research and Development Expenses -3147 -3097

Administrative Expenses -769 -396

Other Operating Expenses -340 -70

Other Operating Income 120 106

Operating Net income 2699 641

Financial Income & A ; Expenses

Income from Long Term Investments

Dividend Income From Group Companies 31 290

Dividend Income From Other Companies 3 2

Interest Income from Group Companies 4 –

Other Interest and Financial Income

Interest Income from Group Companies 398 84

Interest Income from Other Companies 12 2

Other Financial Income From Other Companies – 9

Exchange Gains And Losses -478 106

Interest Expenses and Other Financial Expenses

Interest Expenses to Group Companies -338 -80

Interest Expenses to Other Companies -63 -161

Other fiscal disbursals -6 -10

Fiscal Income and Expenses, entire -437 242

Net income Before Extraordinary points and Taxes 2262 883

Extra Ordinary Items

Group Contributions 40 10

Extra Ordinary Items, entire 40 10

?

Net income Before Taxes 2302 893

Income Taxes

For the Year -539 -127

From Previous Old ages -14 1

Net Net income 1749 767

Nokia ‘s Balance Sheet

2008 2009

Assets

Fixed Assests and Other Non-Current Assests

Intangible Assetss

Capitalized Development Costs 21 13

Intangible Rights 52 46

Other Intangible Assets 155 418

228 477

Tangible Assets – –

Investings

Investings in subsidaries 12084 12109

Investings in associated companies 10 30

Long -term loan recievables from group companies 8 10

Other Non Current Assets 41 74

12143 12223

Current Assetss

Inventories and work in advancement

Natural stuffs and supplies 84 45

Work in Progress 100 86

Finished Goods 70 86

254 217

Receivabless

Deferred revenue enhancement assets – 1

Trade debitors from Group Companies 899 1080

Trade debitors from Other Companies 913 713

Short-run loan receivables from Group Companies 12039 3472

Short-run loan receivables from Other Companies 1 –

Prepaid disbursals and accumulated income from Group Companies 65 15

Prepaid disbursals and accumulated income from Others Companies 2179 1858

16096 7139

Short-run Investings 2 35

Bank and Cash 197 70

Stockholders ‘ EQUITY AND LIABILITIES

Stockholders ‘ Equity

Share capital 246 246

Treasury portions -1885 -685

Reserve for invested cost-restricted equity 3291 3154

Retained net incomes 4489 3788

Net Net income for the twelvemonth 1749 767

7890 7270

Liabilitiess

Long-run liabilities

Long-run Finance liabilities to other companies – 3255

Short-run liabilities

Current Finance Liabilities from Group Companies 13345 3380

Current Finance Liabilities from Other Companies 2598 473

Advanced Payments from Other Companies 182 217

Trade Creditors for Group companies 2377 3280

Trade Creditors for Other companies 695 531

Accrued Expenses and postpaid income to Group companies 217 73

Accrued Expenses and postpaid income to Other companies 1616 1682

21030 9636

Entire Liabilities 21030 12891

Entire 28920 20161

( Nokia Corporation, 2010 )

‘ Measure 2:

o Income Statement Common size:

Nokia ‘s Income Statement

2008 2009 Common Size 2008 Common Size 2009

Net Gross saless 26940 20167 100.00 % 100.00 %

Cost Of Gross saless -18712 -14666 -69.46 % -72.72 %

Gross Margin 8228 5501 30.54 % 27.28 %

Selling and Marketing Expenses -1393 -1403 -5.17 % -6.96 %

Research and Development Expenses -3147 -3097 -11.68 % -15.36 %

Administrative Expenses -769 -396 -2.85 % -1.96 %

Other Operating Expenses -340 -70 2694000.00 % -0.35 %

Other Operating Income 120 106 0.45 % 0.53 %

Operating Net income 2699 641 10.02 % 3.18 %

Financial Income & A ; Expenses

Income from Long Term Investments

Dividend Income From Group Companies 31 290 0.12 % 1.44 %

Dividend Income From Other Companies 3 2 0.01 % 0.01 %

Interest Income from Group Companies 4 – 0.01 % # VALUE!

Other Interest and Financial Income

Interest Income from Group Companies 398 84 1.48 % 0.42 %

Interest Income from Other Companies 12 2 0.04 % 0.01 %

Other Financial Income From Other Companies – 9 # VALUE! 0.04 %

Exchange Gains And Losses -478 106 -1.77 % 0.53 %

Interest Expenses and Other Financial Expenses

Interest Expenses to Group Companies -338 -80 -1.25 % -0.40 %

Interest Expenses to Other Companies -63 -161 -0.23 % -12526.09 %

Other fiscal disbursals -6 -10 -0.02 % -0.05 %

Fiscal Income and Expenses, entire -437 242 -1.62 % 1.20 %

Net income Before Extraordinary points and Taxes 2262 883 8.40 % 4.38 %

Extra Ordinary Items

Group Contributions 40 10 0.15 % 0.05 %

Extra Ordinary Items, entire 40 10 0.15 % 0.05 %

Net income Before Taxes 2302 893 8.54 % 4.43 %

Income Taxes

For the Year -539 -127 -2.00 % -0.63 %

From Previous Old ages -14 1 -0.05 % 0.00 %

Net Net income 1749 767 6.49 % 3.80 %

Income Statement Common size = Any figure / Total Revenue?

o Balance Sheet Common size:

Nokia ‘s Balance Sheet

2008 2009 Common Size 2008 Common Size 2009

Assets

Fixed Assests and Other Non-Current Assests

Intangible Assetss

Capitalized Development Costs 21 13 0.13 % 0.18 %

Intangible Rights 52 46 0.32 % 0.64 %

Other Intangible Assets 155 418 0.96 % 5.86 %

228 477 1.42 % 6.68 %

Tangible Assets – – –

Investings

Investings in subordinates 12084 12109 75.07 % 169.62 %

Investings in associated companies 10 30 0.06 % 0.42 %

Long -term loan receivables from group companies 8 10 0.05 % 0.14 %

Other Non Current Assets 41 74 0.25 % 1.04 %

12143 12223 75.44 % 171.21 %

Current Assetss

Inventories and work in advancement

Natural stuffs and supplies 84 45 0.52 % 0.63 %

Work in Progress 100 86 0.62 % 1.20 %

Finished Goods 70 86 0.43 % 1.20 %

254 217 1.58 % 3.04 %

Receivabless

Deferred revenue enhancement assets – 1 – 0.01 %

Trade debitors from Group Companies 899 1080 5.59 % 15.13 %

Trade debitors from Other Companies 913 713 5.67 % 9.99 %

Short-run loan receivables from Group Companies 12039 3472 74.79 % 48.63 %

Short-run loan receivables from Other Companies 1 – 0.01 % –

?

Prepaid disbursals and accumulated income from Group Companies 65 15 0.40 % 0.21 %

Prepaid disbursals and accumulated income from Others Companies 2179 1858 13.54 % 26.03 %

16096 7139 100.00 % 100.00 %

Short-run Investings 2 35 0.01 % 0.49 %

Bank and Cash 197 70 1.22 % 0.98 %

Stockholders ‘ EQUITY AND LIABILITIES

Stockholders ‘ Equity

Share capital 246 246 1.53 % 3.45 %

Treasury portions -1885 -685 -11.71 % -9.60 %

Reserve for invested cost-restricted equity 3291 3154 20.45 % 44.18 %

Retained net incomes 4489 3788 27.89 % 53.06 %

Net Net income for the twelvemonth 1749 767 10.87 % 10.74 %

7890 7270 49.02 % 101.83 %

Liabilitiess

Long-run liabilities

Long-run Finance liabilities to other companies – 3255 – 45.59 %

Short-run liabilities

Current Finance Liabilities from Group Companies 13345 3380 82.91 % 47.35 %

Current Finance Liabilities from Other Companies 2598 473 16.14 % 6.63 %

Advanced Payments from Other Companies 182 217 1.13 % 3.04 %

Trade Creditors for Group companies 2377 3280 14.77 % 45.94 %

Trade Creditors for Other companies 695 531 4.32 % 7.44 %

Accrued Expenses and postpaid income to Group companies 217 73 1.35 % 1.02 %

Accrued Expenses and postpaid income to Other companies 1616 1682 10.04 % 23.56 %

21030 9636 130.65 % 134.98 %

Entire Liabilities 21030 12891 130.65 % 180.57 %

Entire 28920 20161 179.67 % 282.41 %

Balance Sheet Common Size = any figure in balance sheet / Total Assetss

— —

o Ratios:

Ratios

2008 2009

1 ) Liquidity Ratios

Current Ratio = Current Assets / Current Liabilities 0.012078 0.02252

Quick Ratio = ( Current Assets – Inventory ) / Current Liabilities 0.012078 0.02252

2 ) Long-run Solvency

Entire Debt = Total Debt / Total Assets 0 0

Debt Equity = Total Debt / Total Equity 0 0

Equity Multiplier = Total Assets / Total Equity 2.040051 Days 0.981981 Dayss

3 ) Profitableness Ratios

Net income Margin = Net Income / Gross saless 6.49 % 3.80 %

Tax return On Assetss = Net Income / Total Assets 10.87 % 10.74 %

Tax return On Equity = Net Income / Total Equity 22.17 % 10.55 %

?

‘ Remarks On My Firm In Both Old ages:

Nokia ‘s current ratio in 2008 was 0.012078 and increased in 2009 to 0.02252 which increased by 0.010442 which show how much of the current assets will cover over short term duty, and the speedy ratio in 2008 was 0.012078 and increased besides in 2009 to 0.02252 which increased by 0.010442 and it showed here how much the current assets will cover over short term without depending on stock lists of the concern.

Entire debt and the debt equity in both old ages 2008, and 2009 did non alteration they remained the same with a 0 % while the equity multiplier in 2008 was 2.040051 and decreased in 2009 to 0.981981

Net income border in 2008 was 6.49 % and decreased in 2009 to 3.80 % which showed that the sum gained from 100 $ gross revenues has decreased from 2008 to 2009, return on assets besides had a lessening from 2008 boulder clay 2009 by 0.13 % which showed that for every 100 $ Assets the income generated has decreased by 0.13 $ , eventually the return on equity in 2008 was 22.17 % and decreased with a immense sum in 2009 to 10.55 % clarifying that for every $ 100 dollars of equity the income generated has besides decreased.

Through these analyses in my sentiment, I think that it is a non a well developed house, and they could non pull off their work good.

?

‘ Measure 3:

o Weighted Average Cost of Capital ( WACC ) :

Weighted Average Cost of Capital is An equation that represents the bend over on different types of securities the company has. Each beginning of capital has a Specific rate of return, for case, stocks, and bonds. In add-on to this, these rates of return are weighted in effect to the portion, in which each beginning of capital contributes to company ‘s capital construction. WACC ‘s consequence is what the house will utilize in its determinations as an rating for capital undertakings or investings. ( WebFinance, Inc. , 2010 )

Rule:

‘ WACC = WD x KD or Cd ( 1-TAX ) + We x Ke or Ce ‘

‘ Leaden Debt ( WD ) = entire liabilities / entire liabilities + entire equity x 100.

‘ Weight of Equity ( WE ) = entire equity / entire liabilities + entire equity x 100.

‘ Cost Of Debt ( Cd ) = Harmonizing to Finland ( Nokia ‘s Country ‘s Of Origin )

‘ Tax Rate = revenue enhancement / net income ten 100

‘ Cost Of Equity ( Ce or Ke ) = ( Rrf ‘ Default Spread ) + B ( Risk Premium + Country Spread )

Calculations ( For 2009 ) :

‘ Leaden Debt ( WD ) = 9639 / ( 9636 + 7270 ) x 100 = 57.00 %

‘ Weight of Equity ( WE ) = 7270 / ( 9639 + 7270 ) x 100 = 43.00 %

‘ Cost Of Debt ( Cd ) :

Finland ‘ Europe – 6.35 % ( Analytics, 2007 )

‘ Tax Rate = ( -127 / 767 ) x 100 = -16.56 %

‘ Cost Of Equity ( Ce or Ke ) = Capital Assets Pricing Model ( CAPM ) = ( Rrf ‘ Default Spread ) + B ( Risk Premium + Country Spread )

O Risk Free Return ( Rrf ) = 3.15 % ( THE FINANCIAL TIMES LTD, 2010 )

O Default Spread ( Finland ) = 0 %

o Beta = 1.07985853160269

O Risk Premium = 5.31 %

o Country Spread = 0 %

Cost Of Equity ( Ce ) = ( 3.15 % – 0 % ) + 1.07985853160269 ( 5.31 % + 0 % )

= 0.0315 + ( 1.07985853160269 x 0.0531 ) = 0.0888

Nokia ‘s WACC:

WACC = WD x KD or Cd ( 1-TAX ) + We x Ke or Ce

= 0.57 ten 0.0635 ( 1- ( -0.1656 ) ) + 0.43 x 0.0888

= 0.080 ten 100 = 8 %

?