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Nokia to Offer Smart Maps

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In order to develop and offer digital smart mapping technology for modern cars, Nokia Corporation (NOK) plans to team up with Daimler AG's Mercedes-Benz car unit. This collaboration will certainly boost Nokia’s HERE segment, which deals with mapping and location service.

Most mapping technologies fail to provide specific mapping information like the number and direction of lanes on a road, traffic signs, and the coordinates for traffic lights. Thus, both these companies have teamed up to create a 3D digital mapping solution for the vehicles. This will not only enhance the car mapping technology but will also help the drivers to locate places easily.

However, the date of availability of the 3D mapping technology is not disclosed.

In the recently concluded second quarter of 2013, Nokia’s HERE segment generated total revenue of $305 million, down 17.7% year over year. Hence, we believe that developing such innovative 3D maps for modern vehicles will drive HERE revenues, going forward.

Microsoft Corp. (MSFT) has decided to acquire Nokia Corp’s handset business for $7.2 billion (5.44 billion euros). The deal is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders and regulators.

Microsoft will be paying around $5 billion (EUR 3.79 billion) for Nokia’s Devices & Services Business and about $2.18 billion (EUR 1.65 billion) to license Nokia’s patents for 10 years and use Nokia’s mapping services for 4 years.

Earlier, Nokia teamed up with Microsoft to offer Windows-based Lumia series handsets. However, stiff competition from Google Inc.’s (GOOG) Android-based smartphones and Apple Inc.’s (AAPL) iPhones has resulted in continuous deterioration of its handset business. From a leading mobile phone manufacturer, it gradually slipped to the second spot with only 14% market share at the end of second-quarter 2013.

Even after so many efforts, Nokia’s profits continue to decline. As a result, Nokia has finally decided to sell its handset business to Microsoft.

Nokia currently carries a Zacks Rank #3 (Hold).

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