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Microsoft to Acquire Nokia's Devices & Services Business

Discussion in 'News' started by Cristian_25H, Sep 3, 2013.

  1. Cristian_25H

    Cristian_25H News Poster

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    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.
     
  2. raheelbs New Member

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    The Chief Executive of Nokia Stephen Elop will step aside and return to Microsoft, his position at Microsoft is not yet disclosed but it is being rumored that Mr. Elop will be signed as the CEO for Microsoft once Ballmer hands in his resignation in the coming year.


    As demands grow weak for Nokia’s mobile devices the company is faced with cash-flow problems. It has lost a majority of its market share to Apple and Samsung.
    "It's a bold step into the future - a win-win for employees, shareholders and consumers of both companies," Microsoft's outgoing CEO, Steve Ballmer, said in a statement.

    Source: Microsoft to Acquire Nokia for $7.2 Billion
     
  3. Cheeseball

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    Considering the majority of Nokia's mobile phones are the budget-oriented Asha line and the mid-to-high range Lumia Windows Phones, this isn't exactly that surprising.
     
  4. Roph

    Roph

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    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.
     
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  5. RejZoR

    RejZoR

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    This means however that everyone can just forget Android on any Nokia phone. Which was still kinda posibility up till now. They will be Windows Phone or nothing now...
     
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  6. DayKnight

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    End of Nokia handsets. Bye.
     
  7. remixedcat

    remixedcat

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    This also might make other handset manufacturers not want to have WP on thier phones.

    It would be harder for them to compete against full on backing/ownership of Nokia/MS.

    This would, in turn make android the go to option for any other manufacturer.
     
  8. Fourstaff

    Fourstaff Moderator Staff Member

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    Been expecting this for some time now. Apple makes their own iDevice, Google has Motorola (and Nexus partners), and now Microsoft has Nokia.
     
  9. DayKnight

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    LG is what you meant.
     
  10. Fourstaff

    Fourstaff Moderator Staff Member

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    ASUS (Nexus 7/10), Samsung (Galaxy Nexus), HTC (Nexus One)
     
  11. punani

    punani

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    Should we call Robin Hood ?
     
  12. Mathragh

    Mathragh

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    About time!
     
  13. FordGT90Concept

    FordGT90Concept "I go fast!1!11!1!"

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    Not really. Nokia has never shown any interest in Android as far as I know. Nokia basically reached a point where either they needed to invest heavily in Symbian to make it competitive with Android or use someone else's OS (Android or Windows Phone). Microsoft approached them with an offer they couldn't refuse so Windows Phone it was.

    Microsoft is in a bad position. Windows Phone is doing well but not well enough to run on its own legs. Without someone like Nokia innovating to keep the hardware side of the equation relevant, Windows Phone loses marketshare. Microsoft had to buy the devices and services in order to keep the ball rolling on Windows Phone which Microsoft can't afford to abandon.

    It is surprising that Nokia is calling it quits (their earnings on devices and services were pretty good last quarter I thought) but not surprising Microsoft played their hero. I just wonder what is left of Nokia now that they sold off their primary business.


    Or more. Microsoft is now forced to learn from its own mistakes, just like with Surface and Surface Pro.

    Just like Surface and Surface Pro, Microsoft will probably price itself higher than the competition to keep anti-trust hawks away.
     
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  14. remixedcat

    remixedcat

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    What about thier networking hardware division???
     
  15. erixx

    erixx

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    I sync 3 email accounts on my mobile phone, plus skype and whatsapp. Well it has never been good with androids, but it is now with my new Nokia! Now I can trust my device ;) And camera pro is just wowwowow!
     
  16. tigger

    tigger I'm the only one

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    I never had no problem really with android, the biggest area of instability is all the custom roms, but in general its fine.

    Not tried windows phone os at all, but it looks ok, and it works alongside windows on ya pc pretty well it seems.
     
  17. Crap Daddy

    Crap Daddy

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    Well Balmer said recently that Microsoft is in a transition mode to "devices and services" company.
     
  18. Frick

    Frick Fishfaced Nincompoop

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    http://arstechnica.com/information-...t-buys-nokias-phone-business-for-7-1-billion/
     
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  19. TheMailMan78

    TheMailMan78 Big Member

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    I own a Nokia WP. Honestly its better than any Android device I have ever used. Instead of hating WP because your misplaced hate toward MS maybe you should pick up one and use it for more than angry birds and sexting your sister.
     
  20. Fourstaff

    Fourstaff Moderator Staff Member

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    Who is hating WP in this thread? :confused:
     
  21. micropage7

    micropage7

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    Yep. When nokia switch to windows phone they have no secondary line after trashing symbian and thats painful when especially here most they sell under $70 phone. Actually i dont expect much about nokia, yeah they make good stuff but the wave is changing. Most of my friend use android, some blackberry and only one who using nokia.

    I know MS put their much money on pushing WP, and they hanging on nokia reputation but i have to say the wave is changing
     
  22. FordGT90Concept

    FordGT90Concept "I go fast!1!11!1!"

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    Actually, from what I seen, Windows Phone 8 is completely disconnected from Windows (unlike Windows Phone 7). Everything on Windows Phone 8 either happens through the built in Stores or like working with a flash stick (copy music, videos, pictures, etc.). It doesn't require proprietary software on a computer of any kind for anything after it is activated.
     
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  23. micropage7

    micropage7

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    Maybe yes and maybe not
    WP interface its like win8 and somehow i feel like Ms wanna follow apple
     
  24. Frick

    Frick Fishfaced Nincompoop

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    If you're talking interfaces MS have talked about "Windows Everywhere" for quite some time. Shared kernel and a unified UI are steps towards that.
     
  25. DayKnight

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    Whoops. My apologies. I was talking about the latest greatest, recently slashed price, Nexus 4. :D
     

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