You might have read that blog entry a recently where we tried to make the case for a business cutting the amounts paid to shareholders in dividends in order to conserve cash and/or invest in projects.
Well it looks like Stephen Elop must read the Business Studies blog (thanks Stephen) because that's exactly what he and the Nokia board have just decided to do!
Nokia has cancelled its dividend for the first time in its 148-year history as the business looks to counter intense investor concerns about its cash position.
The official reason given by Nokia for this decision is that of providing the firm with "strategic flexibility". In other words, it may need the cash, so it's best t hang on to the cash rather than give it to shareholders.
Here is an extract from the Nokia results announcement:
To ensure strategic flexibility, the Nokia Board of Directors will propose that no dividend payment will be made for 2012 (EUR 0.20 per share for 2011). Nokia’s Q4 financial performance combined with this dividend proposal further solidifies the company’s strong liquidity position.
This video from Bloomberg features a brief comment from Nokia CEO Stephen Elop and some follow-up analysis of the background to and reasons for Nokia's decision to stop the dividend.
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