Warning: unlink(/var/sites/s/smart-chimps.co.uk/public_html/wp-content/uploads/wpcf7_captcha/4236818118.png): No such file or directory in /var/sites/s/smart-chimps.co.uk/public_html/wp-content/plugins/really-simple-captcha/really-simple-captcha.php on line 263

Warning: chmod(): No such file or directory in /var/sites/s/smart-chimps.co.uk/public_html/wp-content/plugins/really-simple-captcha/really-simple-captcha.php on line 264

Warning: unlink(/var/sites/s/smart-chimps.co.uk/public_html/wp-content/uploads/wpcf7_captcha/4236818118.png): No such file or directory in /var/sites/s/smart-chimps.co.uk/public_html/wp-content/plugins/really-simple-captcha/really-simple-captcha.php on line 265
Microsoft acquires Nokia mobile business

Microsoft acquires Nokia mobile business

0

Buys Nokia's Devices & Services business, leaving Nokia with NSN, HERE and Advanced Technologies

Microsoft and Nokia have announced today that Microsoft will purchase all of Nokia's Devices & Services business, will license Nokia's patents, and license and use Nokia's mapping services, for a total transaction price of Euro 5.44 billion in cash.

Under the terms of the agreement, Microsoft will pay Euro 3.79 billion to purchase all of Nokia's Devices & Services business, and Euro 1.65 billion to license Nokia's patents. Microsoft will draw upon its overseas cash resources to fund the transaction. Nokia expects to book a gain on sale of approximately Euro 3.2 billion, and expects the transaction to be significantly accretive to earnings. Following the transaction, Nokia plans to focus instead on its three established businesses: NSN, network infrastructure and services; HERE, mapping and location services; and Advanced Technologies, technology development and licensing. At closing, this transaction is expected to strengthen Nokia's financial position and provide a solid basis for future investment in these three businesses.

The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia's shareholders, regulatory approvals and other closing conditions.

Stephen Elop announced after today's announcement that he is stepping aside as Nokia president and CEO to become Nokia executive vice president of Devices & Services. In his place is Risto Siilasmaa, chairman of the Nokia Board of Directors and now Nokia interim CEO.

Subject to the closing of the transaction, Microsoft will acquire all of Nokia's Devices & Services business, including the Mobile Phones and Smart Devices business units as well as the design team, operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions.

At closing, approximately 32,000 people are expected to transfer to Microsoft, including approximately 4,700 people in Finland. Nokia's CTO organisation and patent portfolio will remain within the Nokia Group. The operations that are planned to be transferred to Microsoft generated an estimated Euro 14.9 billion, or almost 50%, of Nokia's net sales for the full year 2012. As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing, and Microsoft will grant Nokia reciprocal rights related to HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity.  Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia's Devices & Services business internally. If the transaction closes Microsoft is expected to become one of the top three customers of HERE. Stated Steve Ballmer, Microsoft chief executive officer: 'It's a bold step into the future, a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft's share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services. In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.' He continued: 'We are excited and honoured to be bringing Nokia's incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution. With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in FY15, and we see significant long term revenue and profit opportunities for our shareholders.' Added Risto Siilasmaa, Nokia Interim CEO: 'For Nokia, this is an important moment of reinvention and from a position of financial strength we can build our next chapter. After a thorough assessment of how to maximise shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders. Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.' While Stephen Elop, Nokia executive vice president of Devices & Services, commented: 'Building on our successful partnership, we can now bring together the best of Microsoft's software engineering with the best of Nokia's product engineering, award-winning design, and global sales, marketing and manufacturing. With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting edge innovation of both our smart devices and mobile phone products.' Additionally, Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current phone products. Nokia will continue to own and maintain the Nokia brand. Under the terms of the transaction, Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems. Upon the closing of the transaction, Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia's own mobile devices until December 31, 2015.

Smart Chimps says: Following Nokia's <a href='../FullArticle.aspx?newsid=1550'>weak second quarter </a>due to low volumes of mobile phone sales, this seems to be a potentially strong move for Nokia. Net sales for the second quarter were down by almost a quarter year on year at 24%, while Nokia Group net sales for the first half of 2013 decreased 22% year on year. Better to throw in the towel early than be left high and dry like BlackBerry. However, it is a sad day for the mobile industry to see the great Finish giant sell up after decades of innovation. From wellington boots to mobile phones, to what next? As for Microsoft, it seems the software giant has made the leap into mobile hardware official finally. Will it have what consumers are after though? Is it a cool and sophisticated enough brand to do well in this highly competitive field? Not really in our opinion, but it will be exiting to watch how it handles this challenge. Roll on the first device launch!

Share.

About Author

Comments are closed.