Microsoft buys Nokia’s phone biz for $7.2 billion

by Doug Drinkwater

September 3 2013

Nokia's now-former CEO Stephen Elop (left) is returning to Microsoft as part of the deal
Nokia's now-former CEO Stephen Elop (left) is returning to Microsoft as part of the deal

Microsoft has purchased Nokia’s Devices and Services unit for $7.2 billion, in a move which sees the Redmond computing giant control the Finnish firm’s range of Lumia phones.

The deal is expected to close in Q1 of 2014 and will see a total of 32,000 workers transfer from Nokia to Microsoft, with this figure including 18,300 that are “directly involved in manufacturing”.

Stephen Elop, Nokia’s now-former CEO and also previously of Microsoft, is also stepping aside to move to Microsoft’s Devices division, leaving Risto Siilasmaa as interim CEO of Nokia. One other notable change will see Marko Ahtisaari, Nokia’s executive VP of design and a key figure behind the Lumia range, leave the company in November

Microsoft’s own outgoing CEO Steve Ballmer described the deal was a “big, bold step forward” in an interview with the BBC and said that the acquisition would help the software giant transform from one that “was known for software and PCs, to a company that focuses on devices and services.”

Neither Microsoft or Nokia have spelled out how the partnership will work when it comes to products, although Terry Myerson, the EVP of operating systems at Microsoft, has blogged that Nokia will – in a similar way to Google’s relationship with Motorola – still be treated the same as any other Windows Phone 8 vendor.

Nokia will continue to make networking equipment and hold patents.

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  • John Swain
    11 months 3 weeks ago

    Duplicitous double dealing. This will make the Michael Douglas character of Gordon Gecko look like a boy scout helping little old ladies cross the street. This plays out like a movie scripted for high rollers.

    Before you throw me in the nut tank with all the other conspiracy theorist, read the open letter released to the New York Stock Exchange by the Nokia Board of Directors, dated September 3, 2013. In it you will find some of the most egregious business strategies ever concocted.
    Microsoft has agreed to purchase “Nokia’s Devices & Services business “ for EUR 3.79 billion and “license Nokia’s patents” for EUR 1.65 billion. “Microsoft will draw upon its overseas cash resources to fund the transaction.”

    Translation, Microsoft has found a way of repatriating a hoard of untaxed cash by purchasing a foreign company with cash it would have paid as much as 35% to the Internal Revenue Service.

    Nokia is obviously hurting. It needs to shore up its domestic business. It needs cash to head off an impending economic disaster in a falling European marketplace. So, as part of the deal, Microsoft, with full disclosure, but delivered as a byline within the purchase agreement, is a line of credit agreement.

    Now taken word for word from the same source:

    “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. - See more at: http://press.nokia.com/2013/09/02/microsoft-to-acquire-nokias-devices-se...

    Steve Ballmer, in his last hurrah, has cut a deal with the likes of “Gordon Gecko” personified by Stephen Elop, a former Microsoft exec, now CEO of Nokia, and repatriated within the deal to Microsoft, as the church-lady would say, “How conveeeenient.”

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