Hard times force Nokia to sell its Vertu

Vertu handsets typically cost tens (and up to hundreds) of thousands of pounds sterling each, and can, and do, come in solid gold cases encrusted with diamonds and other glitz. Unsurprisingly, Vertu's customers tend, in the main, to come from Russia, the Middle and Far East although, apparently, there are Vertu 'outlets' (not 'shops' you'll note) in 60 countries around the world.

By the very nature of the products it sells, Vertu appeals to a small although perhaps not necessarily select market but makes excellent profits from its very well-heeled clientele. However it has nothing in common and no overlap with Nokia's commoditised core products for the huddled masses.

Amusingly, those with the money to buy Vertu handsets don't get cutting edge technology along with the diamonds that can cut through a brass-bound armoured glass aquarium. The first Vertu smartphone wasn't available until late in 2010 and the first touchscreen model went on sale in October 2011.

But then Vertu handsets aren't about making verbal statements on a commuter train, they are about making social statements about ostentatious wealth on luxury yachts.

Negotiations to offload Vertu to the private equity outfit Permira, for a price somewhere between €200 million and €300 million, are well under way. Permira already has a stable of luxury brands, including Hugo Boss.

Nokia set up Vertu as a stand-alone self-managed subsidiary back in its glory days of 1998 but the parent company is now in deep, deep trouble. Nokia is reorganising and cutting jobs and other costs as it tries to focus on core assets and those do not include platinum handsets clarted all over in precious stones. (For those of you unfamiliar with Yorkshire dialect, "clarted" means thickly covered).

Retaining such a ridiculously elitist brand is no longer an option and so it must go as Nokia's credit rating falls to junk status, it begins to chew its way through its cash reserves and gambles its future on the mass uptake of its mid-range suite of Lumia phones.

Nokia has to do something; sales overall fell by 29 per cent in Q1, by 40 per cent in its all-important Devices and Services Division and by 52 per cent in its smartphone business. By selling Vertu Nokia will raise some cash and, perhaps more importantly, demonstrate to the market that hard economic times call for hard economic decisions. In short, Nokia is making a virtue of necessity by accepting the necessity of selling its Vertu.