Nokia's Microsoft deal leads to shareholder revolt, call for a "Plan B" (updated)

Nokia's Microsoft deal leads to shareholder revolt, call for a "Plan B" (updated)

Summary: The mobile partnership between Nokia and Microsoft is under fire by shareholders who are calling for the CEO's head and are proposing a "Plan B" on how to revive Nokia's position as a mobile powerhouse.

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TOPICS: Nokia, Banking
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update below

Were the champagne celebrations of a Nokia-Microsoft partnership premature?

An unnamed "group nine young Nokia shareholders" who have also been employees at some point today released an open letter to the company's other shareholders and institutional investors that, in a nutshell, said that the Microsoft deal is a bad one for Nokia and that CEO Stephen Elop should be replaced. (Techmeme)

In the letter, the group said it plans to challenge the Microsoft partnership and strategy at the company's Annual General Meeting for Shareholders on May 3. It said that it has also developed a "Plan B" approach that involves not only replacing Elop but also looks to revamp the company's hiring strategy and eliminate "outdated and bureaucratic R&D practices."

These shareholders said they want to avoid, at all costs, "becoming a poorly differentiated OEM with only low margin, commodity products that is unable to attract top software talent and cannot create shareholder value though innovation."

In generations past, a small group of shareholders might have had trouble generating support for a plan that runs contrary to what the executives determine to be best. But in the modern age of communications, the group is spreading its message virally on the Internet and asking others - from other shareholders to users, fans, employees or developers - to join the cause by spreading the word via Facebook, Twitter and their own blogs.

It's unclear whether these shareholders will gain any traction with their efforts - but they seem to be in good company. Financial markets also seem to have a bad feeling about this deal with Microsoft, which, like Nokia, is suddenly finding itself scrambling to catch up because it failed to respond and innovate fast enough when the market shifted.

It's almost ironic that HP, which has been a long time partner is distancing itself from Microsoft on the mobile front, pushing its WebOS over Windows, while Nokia, which has also seen a decline in its own mobile leadership, would turn to Microsoft as its savior.

Separately, at the Mobile World Congress conference in Barcelona today, Google CEO Eric Schmidt said that his company tried hard to woo Nokia and that the two were involved in "extensive" confidential discussions, according to a Reuters report.

Also see: Fear of Google drove Nokia-Microsoft partnership

Meanwhile, Nokia Executive VP Mary McDowell told Bloomberg that the Microsoft option was the only one put before the board for a vote at its Feb. 10 meeting, a day before Elop and Microsoft CEO made their partnership announcement. McDowell told Bloomberg:

We had presented three scenarios: continue with the current plan of record, a Google option and a Microsoft option but the recommendation that we made to them was the Microsoft option so that’s what they approved.

That report noted that, since then, Nokia's shares have declined by 18 percent and wiped out about 5.5 billion euros, or $7.4 billion, of the company's market value.

update Feb. 17: It appears that this "Plan B" revolt is a hoax, according to Dow Jones and a Twitter post. That message reads: "there are no 'nine young investors', just one very bored engineer who really likes his iPhone." Dow Jones said it never could confirm the identities of those behind the Plan B.

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Topics: Nokia, Banking

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  • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

    These shareholders said they want to avoid, at all costs, becoming a poorly differentiated OEM with only low margin, commodity products that is unable to attract top software talent and cannot create shareholder value though innovation.<br><br>Riiiight. And how are they going to do that? Symbian? Hahaha. No, try again. Meego? Not likely. I've never even heard of Symbian before this. What does that tell you?
    The one and only, Cylon Centurion
    • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

      @Cylon Centurion 0005 Never even heard of Symbian? That's the OS running on my cell phone before the iPhone was even born.
      Tiggster
      • Where were these PlanB-ers before MSFT invasion then?

        Too late for these bunch of babies to cry now.
        LBiege
      • Symbian days are over...

        @Tiggster We all agree, but, the Symbian days are over.

        How many developers are there in this world who knows Symbian Vs. .NET (Silverlight runs ontop of .NET). It would be 100:1.
        jinishans
      • Executives will have to listen

        If it does gain traction. Elop is gone, and so is Steve Balmer.

        When that happens, the market will change as MS will be under new leadership. It may have a chance then.
        Uralbas
    • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

      @Cylon Centurion 0005 <br><br>It tells me you don't know much about the industry since Symbian still has the biggest mobile phone market share, and was only recently passed by Android as the number 1 smartphone OS. Not knowing what it is is nothing to brag about if you're commenting on a Nokia article.
      JRonin
    • never even heard of Symbian?

      @Cylon Centurion 0005 Tells me you don't know much about phones.
      30otnix
    • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

      @Cylon Centurion 0005 So how do you think they do it. With a failing MSFT OS? Give me a break! I guess Elop did not resign in MSFT. Here is what the conversation might be -

      Ballsmer - Our mobile stratergy sucks and we would be left in dust since people are moving more towards mobile and tablet.
      Elop - why dont you partner with some big mobile guys - Say Nokia
      Ballsmer - Oh, I tried and they asked me to FTHO. I have an idea, why dont you join Nokia.
      Elop - Are you crazy, how would they let me in.
      Ballsmer - Let me buy some board of directors and make you the CEO.
      Elop - Well then, talk to you after a small break. Over to Nokia!
      browser.
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        Fanboy much? WP7 is hardly a failing OS.

        Sad to be the one to tell you this, but WP7 is creating a slight disturbance in the force. It's needed. Google needs the competition.
        The one and only, Cylon Centurion
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @Cylon Centurion 0005,
        If WP7 is really good (I've seen one in the wild and it was owned by an MS fanboy), why did MS pay Nokia billions (yes billions) to use it?
        random_name
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @Cylon Centurion 0005

        Google's competition is APPLE.
        DonRupertBitByte
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @random_name

        Easy: They're not.

        h t t p : / / w w w .neowin.net/news/microsoft-is-not-paying-nokia-billions-to-support-windows-phone-7?utm_source=twitterfeed&utm_medium=facebook
        The one and only, Cylon Centurion
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @Cylon Centurion 0005.
        I guess it depends on where you get your news. Hmm neowin.net or The Seattle Times. http://seattletimes.nwsource.com/html/businesstechnology/2014217651_nokia14.html
        random_name
      • failing OS? In what way?

        @browser.

        Because it didn't sell the same amount in 8 weeks that Android did in 2.5 years? That's an odd way to caculate failure from.

        But then fanboys have there own math that always give them the answer they want. ;)
        John Zern
      • random_name, or it could be the wording?

        if a company gives up some profits via reduced licensing, or actually gives them money, either way the bottom line is the same, so it's all about how the person doing the writing wants to word it for the effect they're looking for.
        John Zern
    • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

      My point was, Symbian was a flop, reletively ignored by just about everyone. It's dead. And if those 9 shareholds can't see that, that is their own problem.
      The one and only, Cylon Centurion
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @Cylon Centurion 0005 Symbian was NOT a flop, it made Nokia a lot of money, for a lot of years. It's still making them money. The problem with Symbian is mostly due to an interface that is having trouble competing with the latest from Apple and Google. Symbian is the best selling OS of all time, do some reading or stop making ridiculous comments. It's embarassing.
        JRonin
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        If it was making them money, they would be in this position to begin with. The OS is dying. Saving it hasn't work, and all indications point that Meego would have gone the same route.

        Android was a non starter.
        The one and only, Cylon Centurion
      • RE: Nokia's Microsoft deal leads to shareholder revolt, call for a

        @Cylon Centurion 0005

        Symbian wasn't a flop at all. It's just past it's prime and hasn't been kept up to date. It's a bit like how things would go if MS had just kept polishing the heck out of Windows 3.1.1 wile Apple rolls out OS X.
        SlithyTove
      • JRonin is right

        Nokia, as was the rest of the industry, was caught off guard by the iPhone redefinition of the smartphone interface and app store initiative.<br><br>They either develop their own platform, or partner. These shareholders want to see then develop their own (risky but rewarding if they get it right). Nokia's CEO choose the easier path. I'd question the choice of partner, none of these MS partnerships have ever worked in the past. I'm sure this one will;-)
        Richard Flude