Shares in Psion collapsed 32 per cent yesterday after the technology company unveiled plans to cash in its stake in the Symbian mobile phone venture that it founded six years ago.
The company is selling its 31.1 per cent share of Symbian to the Finnish mobile phone maker Nokia for an initial £93.5m. Nokia is currently the largest shareholder with a 32.2 per cent stake. Nokia is also Symbian's largest customer, accounting for 70 to 80 per cent of revenues. The move will effectively hand it control of Symbian, which was set up to create an industry standard technology to power mobile phones and whose biggest rival is Microsoft.
Psion will receive another two payments for its stake - one in March next year and one in March 2006 - estimated at £42.2m in total although the precise amount will depend on how many Symbian-powered gadgets are sold.
Taking those estimates into account, the deal values Symbian at £436.2m - well above the £300m valuation it had when Motorola sold its 19 per cent stake last Summer but far beneath some analysts' forecasts of closer to £1bn.
The sale was interpreted as a big negative for Psion, whose share price has recently been driven mainly by speculation of the worth of its Symbian stake. Many analysts thought Psion, which had long hoped to unlock value by floating Symbian on the stock market, had got a poor price. Shares in Psion closed down 30.75p at 65p.
Analysts at Merrill Lynch had valued Psion's stake in Symbian at £240m. "We believe that the announced deal is a significant negative for Psion, given that its Symbian stake was the key valuation driver for the stock. Moreover, we believe that the proposed price paid by Nokia is significantly below the potential value Psion may have been able to crystallise in the event of Symbian's potential IPO," they said.
Psion hinted yesterday that it had come to the view that a flotation of Symbian in the near term now looked unlikely, partly because of Nokia's dominant position within the venture. The remaining shareholders in the venture include Ericsson, Panasonic, Samsung, Siemens and Sony Ericsson although it is unclear whether they too will now sell out.
David Potter, Psion's chairman and founder, stressed that Psion would still benefit over the next two years if the company beat sales forecasts or was floated. "It [Symbian] is a child of Psion," he said. "But we're not there for sentiment, we're there to serve the market and to serve our shareholders."
Psion, which has invested about £29m in Symbian, will now focus on its Teklogix business where it sells technology systems to industrial corporates whose workers use the gadgets to input data.
The planned stake sale also strengthens Psion's balance sheet dramatically, giving it extra firepower to make acquisitions and strategic investments - something that new chief executive Alistair Crawford is keen to do.
Mr Crawford said yesterday that if suitable targets had not been found in two years' time, the company would look at returning some of the cash to shareholders. Nor will Psion have to account for Symbian's losses, which totalled £9.4m in 2002, any longer.