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Drowning in debt, British luxury smartphone maker Vertu calls it quits (for now)
Known for making subjectively outlandish luxury phones, British outfit Vertu was able to carve out enough of a sizable niche to allow it to stay afloat for almost two decades. However, with a failed plan to rescue itself out of bankruptcy in the rearview mirror, Vertu announced its U.K. manufacturing arm will be shut down.
Vertu has had a relatively tumultuous existence, which began in 1998 when Finnish manufacturer and nostalgia-lover Nokia established it as its luxury arm. Vertu was eventually sold to private equity group EQT VI in 2012, a decision that then-Vertu CEO Perry Oosting said was a “logical move.” This was because, in addition to a lack of connection with Nokia, Vertu independently sold, manufactured, and marketed its phones.
EQT VI did not own Vertu for very long, since the group sold its share of the luxury phone manufacturer to Hong Kong-based holding company Godin Holdings in 2015. Vertu changed hands yet again in March, when Turkish businessman Hakan Uzan purchased the company for around $61 million.
The purchase seemed to carry little to no mutual benefit, however. Starting with Hakan himself, he hails from a family-run conglomerate that owned a bank, several power plants and broadcasting companies, and a mobile carrier. However, the Turkish government seized over 200 companies that belonged to the Uzan Group, which led to Hakan fleeing to France, where he was granted political asylum.
Uzan probably thought that his purchase of Vertu would turn things around, at least financially. By the time he purchased the company, however, it was already in dire financial straits. By 2015, Vertu reported it sold around 450,000 devices worldwide, a low-key impressive number given how it sells phones that cost thousands of dollars. The company also partnered up with hundreds of retail outlets worldwide to sell its incredibly expensive handsets, so at least it had some avenues to sell them through.
Unfortunately for Vertu, the sales amounted to a loss of roughly $68.5 million on sales of $142 million. Making things worse, the British manufacturer had around $165.4 million in debt, which brings us to today’s news that Vertu will shut down its U.K. manufacturing operations. Uzan offered to pay creditors $2.4 million of the total amount owed, but that was not enough to save the company from bankruptcy.
As such, an external spokesperson confirmed that Vertu has gone into liquidation, with 200 people now looking for employment elsewhere.
Uzan reportedly wants to revive the company sometime in the future, but we doubt its bling-y phones will make a similar comeback. It can be argued that basing their business purely around incredibly expensive phones is what sunk Vertu in the first place. Sure, the company was able to carve out a small niche, but with mid-range, affordable phones becoming increasingly popular over the years, combined with the little room it already had, it was only a matter of time until Vertu would collapse.
Goodbye for now, Vertu
With that said, if the reports are true, goodbye for now, Vertu. We will not miss your $10,000 smartphones, and we will certainly not miss their looks that screamed “I have tons of money,” but there was something to be said about someone assembling your luxury phone, one piece at a time.