Nokia inks $2 billion phone deal in China, shareholders unimpressed

Chris Ziegler
C. Ziegler|03.09.08

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Chris Ziegler
March 9, 2008 11:42 AM
Nokia inks $2 billion phone deal in China, shareholders unimpressed

As awesome of a win for Nokia as it sounds, it turns out that Espoo does a regular business with wholesale distributor China Postel, and this year's order of $2 billion falls short of the $2.5 billion ordered in 2007, leaving shares in Nokia to fall about 1.8 percent on the news. Analysts think that lower average handset prices account for at least a part of the lower order value, along with speculation that China Postel might roll deep with some additional orders later in the year. Here's the interesting part, though: the orders are apparently "framework agreements" which are totally commitment-free on both Nokia's and China Postel's parts, meaning that the $2 billion could vanish into thin air with no warning or explanation whatsoever. In fact, analysts can't even confirm whether last year's $2.5 billion worth of handsets was ever fulfilled. Wait, what's the point of these so-called framework agreements in the first place, then?

[Via mocoNews]
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