Nokia is almost out of the maps business as the company sold its HERE app to a major car consortium.
The world’s three largest makers of luxury cars, BMW AG, Audi AG and Daimler AG, unveiled its decision to acquire Nokia HERE maps for 2.8 billion euros ($3.1 billion) aiming at the technology for connected cars that is supposed to become the basis for self-driving vehicles.
“HERE has been a separate operating and reportable segment for financial reporting purposes for Nokia with a non-IFRS operating profit of EUR 46 million on net sales of EUR 552 million for the first half of 2015, and a non-IFRS operating profit of EUR 31 million on net sales of EUR 971 million for the full year 2014,” Nokia specifies.
“In reported terms, HERE generated an operating profit of EUR 28 million for the first half of 2015, and an operating loss of EUR 1 241 million for the full year 2014, with the latter including a EUR 1 209 million charge for the impairment of goodwill. At the end of June 2015, HERE had 6 454 employees. Nokia plans to report HERE as a discontinued operation from the third quarter of 2015 onwards. HERE will continue to operate as a business of Nokia until the closing of the transaction.”
Part of the consortium will have an equal share of Nokia’s HERE division, and the transaction is expected to be completed in the first quarter of next year, it was confirmed Monday. The phone maker said its net proceeds on the sale will total slightly more than 2.5 billion euros.
“This purchase shows carmakers are expecting huge new growth in autonomous driving and connectivity,” said Frank Biller, a Stuttgart, Germany-based analyst for LBBW. “They’ve all been cooperating with HERE for maps for a long time, so they know about the quality of the service.”
Nokia’s maps app is accurate to within as few as 10 centimeters which is essential as carmakers are cosnidering to introduce self-driving vehicles. The division of the consortium has announced that currently it works with as many as 10 carmakers on automated driving.
It has already created the software that’s already inbuilt in the cars and that allows to link a vehicle with a smartphone app and can learn drivers’ habits, such as picking up a coffee en route to work.
“Our environment is constantly changing. That’s why the information in digital maps has to be continually updated so that maximum utility can be offered,” stated Rupert Stadler, Chairman of the Board of Management of AUDI AG.
“HERE will play a key role in the digital revolution of mobility, combining high definition maps and data from vehicles to make travel safer and easier for everyone,” explained Harald Krüger, Chairman of the Board of Management of BMW AG.
This knowledge will be to the benefit of all carmakers and their customers. “High-precision digital maps are a crucial component of the mobility of the future. With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries,” stated Dieter Zetsche, Chairman of the Board of Management of Daimler AG.
Meanwhile, Nokia explained that it sells its maps app because it plans to focus on making mobile-phone network equipment. The sale price compares with the $8.1 billion that Nokia paid in 2008 for map provider Navteq Corp., one of the businesses that it combined to create HERE.
“I believe today’s announcement is a very good outcome for HERE, its customers and employees. The new ownership structure of HERE will allow us to accelerate our strategy, further scale our business and fulfill our intent to become the leading location cloud company across industries,” said HERE President Sean Fernback.