Microsoft To Acquire Nokia Mobile Phone Unit
One has to wonder why Microsoft has been doing everything it can to bury big news over the past couple of weeks. Ballmer's retirement plan was unveiled in a hush-hush fashion, and a few days ago, Microsoft decided to give a board seat to an activist investor for the first time in the company's history. As if that weren't enough change for two weeks, there's this: on a U.S. holiday, Microsoft announced that it would be acquiring Nokia's Devices & Services business, while also licensing Nokia's patents and mapping services.
To be clear, this is Microsoft buying Nokia's mobile phone business for around $7.2 billion. Even the release puts it this way: "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." Microsoft will draw upon its overseas cash resources to fund the transaction, and barring any hang-ups, the deal will officially close in Q1 2014.
Why would Microsoft buy a flagging phone company that can't seem to grab U.S. market share regardless of what it tries? According to Microsoft, it's aiming to "accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing." Anyone who has worked in an office would cringe at such a statement. "Synergies?" Really? That feels like a phrase ripped straight out of a TV drama.
It's unclear whether Steve Ballmer refused to go along with such a plan, or if he just felt too exhausted to run yet another department. Either way, the timing of all of this can't be by happenstance. Microsoft feels like a company that's far too large already, and now it's about to acquire a phone company. If its future phone hardware business is anything like its tablet hardware business, shareholders may want to sell while they still can. The Surface has thus far been a complete flop, and it's hard to imagine what Microsoft could inject into Nokia that would help it truly compete with the likes of Samsung and Apple.
It's a tall order, for sure.
To be clear, this is Microsoft buying Nokia's mobile phone business for around $7.2 billion. Even the release puts it this way: "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." Microsoft will draw upon its overseas cash resources to fund the transaction, and barring any hang-ups, the deal will officially close in Q1 2014.
Why would Microsoft buy a flagging phone company that can't seem to grab U.S. market share regardless of what it tries? According to Microsoft, it's aiming to "accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing." Anyone who has worked in an office would cringe at such a statement. "Synergies?" Really? That feels like a phrase ripped straight out of a TV drama.
It's unclear whether Steve Ballmer refused to go along with such a plan, or if he just felt too exhausted to run yet another department. Either way, the timing of all of this can't be by happenstance. Microsoft feels like a company that's far too large already, and now it's about to acquire a phone company. If its future phone hardware business is anything like its tablet hardware business, shareholders may want to sell while they still can. The Surface has thus far been a complete flop, and it's hard to imagine what Microsoft could inject into Nokia that would help it truly compete with the likes of Samsung and Apple.
It's a tall order, for sure.
