HMD said on Tuesday that it will use the funds to invest in the development of 5G smartphones, hoping to cooperate with local operators to sell in the United States.
Editor’s note: This article is from Tencent Technology, reviewed by Cheng Xi.
The funds will also be used to help HMD expand in markets such as Brazil, Africa and India, and transfer it from the hardware field to other fields such as software and services.
According to reports, HMD, headquartered in Espoo, Finland (also where Nokia is headquartered), said on Tuesday that it will use the funds to invest in the development of 5G smartphones, hoping to cooperate with local operators to sell in the United States. The funds will also be used to help HMD expand in markets such as Brazil, Africa and India, and transfer from the hardware field to other fields such as software and services.
In 2016, HMD and Foxconn reached a joint agreement to acquire from Microsoft the mobile division originally from the Finnish telecommunications giant. According to the agreement, HMD acquired the design and marketing rights for Nokia mobile phones. Foxconn Group mainly produces mobile phones, while Nokia receives revenue from patent fees and trademark licensing from each mobile phone sold by HMD. HMD sold 70 million mobile phones last year and claims to have sold more than 240 million so far.
As we all know, Microsoft failed to acquire Nokia’s mobile phone business in 2014. Today, Microsoft has completely abandoned its smartphone hardware and mobile operating system business. HMD, which took over the Nokia mobile phone brand, hopes to reverse the fate of this business by launching new versions of nostalgic Nokia phones and high-end Nokia smartphones running Google’s Android mobile operating system.
HMD CEO Florian Sage said in an interview with the media: “We believe that this kind ofA clear focus on the differentiated smartphone experience will make us different. Our partners have also clarified their attitudes and strongly support us in accelerating development in the next few years. “
The executive added that the company is still investing heavily in feature phones—compared to smartphones, feature phones are also called “elderly phones” or “student phones”—but the company said that in Africa Waiting for the market, users of feature phones have begun to gradually turn to smart phones. The company advertises its smartphones as a more affordable alternative to high-end phones such as Samsung and Apple, and works directly with Google to provide users with regular security updates to the Android system.
HMD told the media that the company’s net income last year was 1.7 billion euros (US$2 billion), a decrease of nearly 30% from the 2.4 billion euros in 2018. The company said that this was due to the company’s reduced demand The existence of a market for further investment. The company’s losses increased by more than 50% in 2019 to 295 million euros.
The COVID-19 crisis has deeply affected the smartphone market. Market research company IDC predicts that smartphone shipments this year will drop by 11.9% year-on-year to 1.2 billion units. During the COVID-19 pandemic, HMD has shifted its focus to online sales, which executives said, which enabled it to return to profitability in June.
“This is undoubtedly a challenging environment, but we can say that we have also seen some key changes in the market, and we think these changes are really accelerated because of the new crown epidemic… The biggest change is the shift to the Internet Shopping. This is not temporary, but it will continue.”
This is the second time in HMD’s history that it has raised funds from outside investors. The first time was in 2018, when the private valuation of the business exceeded $1 billion, and it was known as a technology unicorn company.
HMD declined to disclose the new valuation of this financing transaction, saying that this is the first transaction in a larger round of financing. The company is majority-owned by Smart Connect, a private equity fund managed by former Nokia executive Jean-Francois Baril.