Thursday, September 27, 2012

Nokia Corporation (NYSE:NOK) may skip announcing a dividend, fear investors

Nokia Corporation (ADR)(NYSE:NOK) may skip announcing a dividend this year - at least that is what investors are apprehending as the company reports continued losses and is endeavouring to make inroads into the smartphone segment.

In its bid to compete with Apple and Samsung the company is guzzling down cash at the rate of about $300 a month and spending hugely on its new generation smartphones and marketing them.

While investors fear that the unthinkable may happen - Nokia has been consistent with the payments of dividends despite reporting losses - analysts feel that it would be prudent for the company to conserve its cash at this juncture and not pay dividends.

On the flip side, skipping a dividend would mean alienating investors, especially at a time when its stock price is on the decline.

Will NOK Rebound After The Latest Slump? Find Out Here

According to records available, Nokia has consistently paid dividends since 1989 and has maintained it through all kinds of crisis, including the break up of the Soviet Union.

However in recent years the company has reduced its payout and in the last four years it has been slashed by more than half to 20 cents a share, according to Bloomberg data.

If Nokia wants to maintain its dividend payout at its current levels it would have to pay about $964 million from its cash reserves.

Nokia shares were trading up about 2 percent in early trades on Thursday. The stock has declined about 48 percent in the last one year. 

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