Tuesday, September 3rd 2013

Microsoft to Acquire Nokia's Devices & Services Business

Microsoft Corporation and Nokia Corporation today announced that the Boards of Directors for both companies have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia's Devices & Services business, license Nokia's patents, and license and use Nokia's mapping services.

Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia's Devices & Services business, and EUR 1.65 billion to license Nokia's patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. 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.

Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia's Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

"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," said Steve Ballmer, Microsoft chief executive officer. "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."

"We are excited and honored 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," Ballmer said. "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."

"For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter," said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today's announcement, Nokia Interim CEO. "After a thorough assessment of how to maximize 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."

"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," said Stephen Elop, who following today's announcement is stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services. "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."

Nokia has outlined its expected focus upon the closing of the transaction in a separate press release published today.

TERMS OF THE AGREEMENT
Under the terms of the agreement, Microsoft will acquire substantially all of Nokia's Devices and Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services-related 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 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide. The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50 percent of Nokia's net sales for the full year 2012.

Microsoft is acquiring Nokia's Smart Devices business unit, including the Lumia brand and products. Lumia handsets have won numerous awards and have grown in sales in each of the last three quarters, with sales reaching 7.4 million units in the second quarter of 2013.

As part of the transaction, Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements.

Microsoft is also acquiring Nokia's Mobile Phones business unit, which serves hundreds of millions of customers worldwide, and had sales of 53.7 million units in the second quarter of 2013. Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products. Nokia will continue to own and manage the Nokia brand. This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia's mobile phones to serve as an on-ramp to Windows Phone.

Nokia will retain its patent portfolio and will grant Microsoft a 10-year non-exclusive license to its patents at the time of the closing. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement in perpetuity.

In addition, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.

Microsoft will also immediately make available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible notes that Microsoft would fund from overseas resources. If Nokia decides to draw down on this financing option, Nokia would pay back these notes to Microsoft from the proceeds of the deal upon closing. The financing is not conditional on the transaction closing.

Microsoft also announced that it has selected Finland as the home for a new data center that will serve Microsoft consumers in Europe. The company said it would invest more than a quarter-billion dollars in capital and operation of the new data center over the next few years, with the potential for further expansion over time.

NOKIA LEADERSHIP CHANGES
Nokia expects that Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would transfer to Microsoft at the anticipated closing of the transaction. Nokia has outlined these changes in more detail in a separate release issued today.

EXTRAORDINARY SHAREHOLDERS MEETING
Nokia plans to hold an Extraordinary General Meeting on November 19, 2013. The notice of the meeting and more information on the transaction and its background are planned to be published later this month.
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50 Comments on Microsoft to Acquire Nokia's Devices & Services Business

#1
rtwjunkie
Actually this is a good thing. Windows phones are selling pretty well. I've used since Windows phone 7, and like much better than iphone and several androids (Can't speak for all). While not a fan of the Start Screen on W8, I actually very much like it on Windows Phone...it's intuitive, touch-oriented, and makes alot of sense. I knew with W Phone 7 we were beta-testing basically the next Windows (W8). With MS backing they should get even more success, kind of like iOS has Apple backing them.
Posted on Reply
#2
Red_Machine
I've kinda been expecting this for a while, tbh. Nokia's been lagging behind in recent years, Windows Phone seemed to be all that was sustaining them.

There's one big thing that I think will really help WP's market share: AAC codec built into the OS. Which means the millions of people the world over who have iTunes accounts can just sync it straight to their Lumia without converting anything or starting from scratch.
Posted on Reply
#3
FordGT90Concept
"I go fast!1!11!1!"
But Windows Phone doesn't have native FLAC support. :(
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#4
Red_Machine
Barely anybody does, it's not surprising.
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#5
Fourstaff
by: Red_Machine
Barely anybody does, it's not surprising.
Android does, Apple has ALAC
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#6
FordGT90Concept
"I go fast!1!11!1!"
by: Red_Machine
Barely anybody does, it's not surprising.
It's open source and free. No excuse not to support it. :(
Posted on Reply
#7
Frick
Fishfaced Nincompoop
by: Red_Machine
I've kinda been expecting this for a while, tbh. Nokia's been lagging behind in recent years, Windows Phone seemed to be all that was sustaining them.
Nonono, that has been the low end phones.



That was last year. Now it looks worse, but they still have twice the total market share than Apple.
Posted on Reply
#8
Triprift
Wonder what % of Nokia sales have been of feature phones compared to Lumia devices.
Posted on Reply
#9
Red_Machine
by: Fourstaff
Android does, Apple has ALAC
ALAC is not FLAC. If you want to include that, then you may was well include Microsoft's Windows Media Audio Lossless (WMAL).
Posted on Reply
#10
Frick
Fishfaced Nincompoop
by: Triprift
Wonder what % of Nokia sales have been of feature phones compared to Lumia devices.
Tried to find fresh numbers, but my Googling skills are failing. Plus I have a headache. Mostly it's bad googling skills.
Posted on Reply
#11
Fourstaff
by: Red_Machine
ALAC is not FLAC. If you want to include that, then you may was well include Microsoft's Windows Media Audio Lossless (WMAL).
Probably, but hardly anyone uses WMAL, but most of the iTunes users (comprising of the majority of the iPhone users) have dabbled with ALAC.
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#12
m1dg3t
Had WP6 IIRc on my HTC TouchPRO 2, was a pretty damn good fone! This partnership should bring some cool stuff to market in the future!

Digital audio, is digital audio. It's all lossy. If you want lossless, buy a turntable and stay home. Or you could get even more lossless with a RTR or tape deck :)
Posted on Reply
#13
FordGT90Concept
"I go fast!1!11!1!"
ALAC, WMAL, nor AAC can replace MP3; FLAC can. Apple nor Microsoft want to admit that. I'm sure the RIAA and similar organizations have something to do with it too (insist on DRM).
Posted on Reply
#14
Fourstaff
by: FordGT90Concept
ALAC, WMAL, nor AAC can replace MP3; FLAC can. Apple nor Microsoft want to admit that. I'm sure the RIAA and similar organizations have something to do with it too (insist on DRM).
Why would you want to replace MP3? Not many people can hear the difference between MP3 VBR and Loseless, and Loseless eats up a few times more space.
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#15
Solidstate89
I'm actually quite excited to see what kind of designs a combined design department of Nokia and Microsoft can come up with. The sales may have been laggard, but the Surface tablets are some of the best examples of industrial design anywhere.

It's almost a shame I have wait a year or two to see the true combined efforts.

by: Roph
Did he ever really leave? He basically seemed like a trojan. Rather than outright buy Nokia, insert a microsoft exec as CEO, run nokia into the ground by pushing an OS that nobody wants, then buy nokia itself on the cheap when nobody wants that anymore either.
I'm so sick of hearing this. How do you "insert" a CEO at another company that requires the approval of the entire board of that company? The Board chose Elop, the Board approved Elop. How does Microsoft figure into deciding what CEO Nokia was going to have? I have yet to see a single person ever explain past this part.
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#16
Dos101
by: Fourstaff
Who is hating WP in this thread? :confused:
He's probably anticipating it based on the comment sections of all the other major sites covering this story.

by: FordGT90Concept


Windows Phone 7 (November 8, 2010) came out with Metro long before Windows 8 debuted (August 1, 2012). Both came about from usability research just like the changes that appeared in Windows Vista did (also frustrated die-hards).
Exactly, and the Metro design mostly stemmed from the cancelled Courier Project http://en.wikipedia.org/wiki/Microsoft_Courier
Posted on Reply
#18
FordGT90Concept
"I go fast!1!11!1!"
by: Fourstaff
Why would you want to replace MP3? Not many people can hear the difference between MP3 VBR and Loseless, and Loseless eats up a few times more space.
Because MP3 is stereo-only and only supports up to 48 KHz. FLAC supports at least 11 discreet channels and at least 192 KHz. The sample rate makes a HUGE difference with high-hats as long as you got tweeters that can vibrate that fast. >2 channels being obvious goes without saying.
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#19
erixx
In general, I may be wrong, but the only thing in WP8 that resembles Windows 8 is IE and the live tile idea, I was surprised to find so little in common... (coding apart). Shows clearly how much bull flies in the internetz...

Also add that Symbian phones are still used a lot and for a reason: stable, ease of use, battery live of nearly a week. They Phone and they Message, take a pic now and then, Google stuff and use Nokia Maps, period.
Some people do not care about stinking apps o crappy games. Weirdos!!! LOL
Posted on Reply
#20
hero1
Good News

Now let's hope that they continue the excellent work of Nokia engineering and make WP a very attractive platform for people who haven't experienced one. It probably is the best of all smartphones OSs out there.
Posted on Reply
#21
Aleksander
When somebody buys a cellphone, he buys it because of the apps you can run in it
If there is the same OS on two different cell phones, then the most powerful device wins the game

I really hate MS even though I use Windows 7 (I was actually thinking to switch to Linux for quite some time)
Posted on Reply
#22
Frick
Fishfaced Nincompoop
by: Aleksander

I really hate MS even though I use Windows 7 (I was actually thinking to switch to Linux for quite some time)
Then stop your bitching and just do it. Good god.
Posted on Reply
#23
Aleksander
by: Frick
Then stop your bitching and just do it. Good god.
LoL, are you going to switch my PC games to linux and other softwares?
This is what I call checkmate :pimp:
Posted on Reply
#24
TheMailMan78
Big Member
by: Aleksander
LoL, are you going to switch my PC games to linux and other softwares?
This is what I call checkmate :pimp:
No, checkmate goes to Microsoft owning your ass because like all battered woman you keep going back. You'll bitch but never leave Suga Daddy Gates because dat mans milkshake brings all the boys to the yard.
Posted on Reply
#25
erocker
Well... It's kinda the only milkshake in the yard. I mean, there's Linux, but that's more of a make your own kinda milkshake.
Posted on Reply
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