Feature Article

June 21, 2012

Finnish Government Will Not Purchase Nokia Shares, Says Prime Minister

Finland’s Prime Minister Jyrki Katainen will not consider purchasing Nokia shares, even as the company’s stock continues to plunge. A suggests that the world’s biggest cell phone manufacturer had hopes that the Finnish government would come to its rescue, but the latest comments from the PM indicates that Nokia will have to fight its own battle. 

The Reuters report quotes PM, as saying, "This is not our business. We are developing Finland into a country where companies can do well, but this is not the way of support along which the government will go." As per this report, Katainen made these comments on a visit to Salo in southern Finland where Nokia plans to close a cell phone manufacturing plant. .

According to Reuter’s reporter Eero Vassinen, Finland has been debating whether the government should invest in Nokia, a major contributor to Finland's economy, to boost its finances and help prevent a foreign takeover, which could result in manufacturing operations going overseas.

However, this is not the first time the government has been asked to consider the purchase of shares of a major national company. As per the report, the Finnish government already holds shares in various companies considered crucial for its national interests. These include forest and chemical companies, and the government is also a majority shareholder in struggling airline Finnair and energy company Fortum, wrote Vassinen.

Vassinen wrote that, “Finland is one of the few remaining triple-A rated countries in the Euro zone, but its exports have been declining with Nokia, as well as traditional industries like paper and pulp. It is struggling to compete with cheaper rivals.”

According to analysts, at its peak, Nokia accounted for around four percent of Finnish GDP and supported a wide range of companies as suppliers. Today, it contributes less than one percent. And its shares have fallen more than 50 percent since the start of the year. The Reuters shows that Nokia shares closed 1.5 percent lower on Wednesday.

The company has lost about three-quarters of its market value, or roughly 20 billion euros ($25.40 billion) in absolute terms, since turnaround chief executive Stephen Elop took the helm in September 2010.

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Edited by Brooke Neuman

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