Nokia loses bid to gain control of Symbian

Sony Ericsson Mobile Communications AB, along with a number of other shareholders in Symbian Ltd., has succeeded in its bid to stop rival Nokia Corp. from gaining control of the mobile phone operating system developer, but only just.

Four of the six shareholders in Symbian invested a total of £187.7 million ($346 million) — £50 million of that in cash, the London-based Symbian announced Wednesday in a news conference that was also covered live over the Web.

Nokia, for its investment of £93.4 million, was able to increase its stake in Symbian to 47.9 percent.

In February, London-based Psion PLC announced its intention to sell Nokia its 31 percent stake in the Symbian wireless operating systems (OS) business, which would have made Nokia the majority shareholder, bumping its share from 32.2 percent to as high as 63.3 percent.

But Symbian’s five other shareholders, Sony Ericsson, Telefonaktiebolaget LM Ericsson, Matsushita Electric Industrial Co. Ltd. (Panasonic), Samsung Electronics Co. Ltd. and Siemens AG, promised to exercise their proportional pre-emption rights to keep Nokia from becoming the majority owner of Symbian.

The equity purchase and rights issue by Symbian generated £57.3 million from Sony Ericsson, which increased the company’s stake in Symbian from 1.5 percent to 13.1 percent. Siemens went from a 4.8 percent to a 8.4 percent Symbian stake with an investment of £20.1 million. For its part, Panasonic spent £16.9 million to secure 10.5 percent of Symbian, up from 7.9 percent.

Ericsson and Samsung chose not to exercise their pre-emption rights, and their shares in Symbian currently stand at 15.6 percent and 4.5 percent, respectively. With Psion out of the picture, Ericsson is the second largest shareholder in Symbian.

Despite the fact that it failed to take control of Symbian, Nokia said it welcomed the outcome of the sale of Psion’s share.

“Smart phones are heading towards accelerated growth and strong competition. The successful completion of pre-emption with additional funding — both of which Nokia has encouraged all shareholders to participate in — will provide Symbian with the means to meet this next phase of growth,” said Matti Alahuhta, Nokia’s executive vice president and chief strategy officer at the event.

Other companies, all of which sent representatives to the news conference for a show of unity, stressed that it is important for Symbian to stay independent of any one manufacturer.

“Panasonic’s decision to exercise its full pre-emption rights in respect of the Psion shares evidences its firm commitment to the independence of Symbian,” said Yoshiaki Kushiki, president of Panasonic Mobile Communications Ltd. at the news conference. “Maintaining such independence through a broad, balanced shareholding base is critical if the Symbian OS is to remain the de facto standard in the mobile phone industry and continue to win the support and loyalty of a broad spectrum of manufacturers and network operators.”

David Levin, chief executive officer (CEO) of Symbian denied the resulting sale of the Psion shares was the outcome of a band of companies joining to “bash on” Nokia. “Today’s agreement is about Symbian and a broad range of companies coming together to make this work. This is an engineering project,” the CEO said.

Levin added that the infusion of cash into Symbian ruled out, at least for the time being, an initial public offering (IPO), something that has long been the subject of speculation in the financial and technology press. “This is about shareholders wanting to buy, not wanting to sell. There is no reason to be speculating about an IPO,” he said.

Symbian, launched in 1998 as a operating system software for smart phones by several large handset manufacturers, is facing increasing competition from other operating systems by companies such as Microsoft Corp., Palm Inc. and PalmSource Inc.

Levin said that Symbian would use the money it generated from its shareholders to “increase the capacity of Symbian to deploy the OS.”