Nokia Calls Off Sanyo CDMA Deal

Nokia abruptly called off its planned spinoff of its CDMA phone business with Japanese manufacturer Sanyo Thursday, while also announcing that it would all but exit from the CDMA market overall by April 2007. Market conditions and disagreements were cited as reasons for the sudden decision.

The two companies originally had announced plans to spin off their CDMA businesses into a single entity in February. However, apparent disagreements over the terms and conditions, as well as the platform's continuing struggles in the emerging markets sector, seems to have doomed the partnership.

Nokia said that it would continue to focus on selective markets, particularly North America. The company's CDMA research and development as well as its manufacturing business would be ramped down through the next year, and it would reevaluate its position in the market.

"We feel it would not be in our best interests to make an agreement that proved to be less beneficial than originally anticipated," said Kai Oistamo, Executive Vice President, Nokia, Mobile Phones. "After exploring all available opportunities and making every effort to create a sustainable CDMA business, this is our only viable option."

Sanyo had not announced any plans on how it would handle its CDMA business as of Thursday afternoon. While doing well in North America through its partner Sprint Nextel, it has had little success entering into other markets.

Both companies' CDMA businesses were far behind Samsung in terms of market share.

While Nokia plans to take a 150 million euro charge to restructure its CDMA business, the end result is expected to have an overall positive impact.