One of the worst kept secrets finally became fact yesterday. Microsoft has acquired Nokia’s devices & services business. Nokia’s device business was the one part of the business making little headway.
Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia’s Lumia, 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.
So what did Microsoft acquire:
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.
The biggest conclusion to draw from this news is that Microsoft is now in a position to make their own devices which was always a strategic weakness for the Redmond based behemoth. Microsoft has also become a strategic licensee of the HERE platform and will pay Nokia separately for a four-year license. The major announcement is that the leadership of Nokia (Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber) would transfer to Microsoft at the anticipated closing of the transaction.
The news was not anticipated but for EUR 3.79 billion to purchase Nokia’s Devices & Services business and EUR 1.65 billion to license Nokia’s patents, Nokia suddenly becomes an asset.
Is this the beginning of Nokia helping Microsoft become a better and bigger mobile company?
