Microsoft to buy Nokia's devices, services unit for $7.2B

Microsoft to buy Nokia's devices, services unit for $7.2B

Summary: Microsoft says the deal will buy Nokia's devices and services unit — leaving the Finnish phone maker to networking, mapping, location, and other technologies.

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Microsoft CEO Steve Ballmer and Nokia CEO Stephen Elop.
(Credit: CNET)

Microsoft announced on Monday that it will acquire Nokia's devices and services unit in a bid to accelerate the software giant's Windows ecosystem.

The deal is set to go ahead for about $5 billion (€3.79bn), with an additional $2.17 billion (€1.65bn) to be spent on licensing Nokia's patents.

The boards of both companies agreed to the transaction, which will see the Redmond, Washington-based software giant purchase the Espoo, Finland-based company's phone making unit and patents, and license and use its mapping services.

The news comes a few weeks after a Wall Street Journal report claimed that Microsoft was looking to buy Nokia, but discussions broke down.

The agreement will see Microsoft becoming a fully fledged phone maker, years after it evolved its Windows Mobile platform into Windows Phone.

Microsoft said in a lengthy statement that it will draw in overseas cash to fund the transaction. The deal is expected to complete around the first quarter of 2014, and will be subject to approval by the shareholders of both companies.

U.S. and EU regulators will likely require the approval of the acquisition.

Microsoft chief executive Steve Ballmer, who announced his retirement in August, called the deal a "win-win" for employees, shareholders, and consumers of both companies. Nokia chief executive Stephen Elop, a former Microsoft executive who joined the phone maker in 2010, said that the partnered companies will now be able to "bring the best" of both firms.

Elop will also be coming back to Microsoft, Ballmer wrote in an email to staff. He will lead the new Microsoft-owned phone making division, and report directly to Ballmer. Other executives will join Elop at Microsoft, including smart devices chief Jo Harlow, operations boss Juha Putkiranta, feature phones director Timo Toikkanen, design leader Stefan Pannenbecker, and sales and marketing vice president Chris Weber.

In a TechNet blog post published at 6am Helsinki time, both chief executives said: "For Microsoft as well, today is a bold step into the future, a huge leap forward on our journey of creating a family of devices and services that delight people and empower businesses of all sizes."

Global coverage: Nokia Interim CEO: Microsoft deal makes us stronger | Even with Nokia devices, Microsoft wants to license Windows Phone to other makers | Does its Nokia buy thwart or fuel a possible Microsoft break-up? | Microsoft shows how to flush decades of Nokia goodwill away | Microsoft gets less than $10 per Windows Phone unit | Microsoft-Nokia deal: Reaction from the Twitter trenches | Elop drops Nokia CEO role to lead devices team under Microsoft deal

Under the terms of the deal, Microsoft will acquire around 32,000 Nokia employees, including 4,700 people in Finland and 18,300 employees directly involved in the manufacture, assembly, and production of devices worldwide. Nokia will also assign its long-term patent licensing agreement with Qualcomm, a smartphone chip maker, and licensing agreements to Microsoft as part of the deal.

Microsoft will absorb the company's smart devices unit, which develops the Lumia line-up of smartphones, allowing Microsoft to directly control both the hardware and software ecosystem.

BlackBerry, one of the remaining smartphone makers in control of its own ecosystem outside of the Apple and Google duopoly, is currently undergoing an internal review in efforts to attract a buyer or split up, and will face its toughest challenge ahead with the Microsoft-Nokia deal.

"We will continue to build the mobile phones you've come to love, while investing in the future — new phones and services that combine the best of Microsoft and the best of Nokia," Ballmer and Elop wrote.

Topics: The Microsoft-Nokia Deal, Microsoft, Nokia

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121 comments
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  • Microsoft to buy Nokia

    Hmmm so Elop was indeed a trojan horse.
    walmirlanza
    • Microsoft to buy Nokia's devices, services unit for $7.2B

      first scuttle the ship and then salvage whatever you can at the price of a scrap .... what a novel idea!
      kc63092@...
      • Two of the world's most bumbling executives

        Ballmer and Elop have ruined more mobile platforms than the rest of the industry combined.

        Don't forget they put knives into both MeeGo and Symbian, while forcing their own Windows platform that failed anyway.

        It should not be allowed that Elop can work as a proxy for Microsoft, trash the place, then give it to Microsoft to buy back.
        Vbitrate
        • Now it all makes sense!

          Elop's virtually Osborning of Nokia -- killing off SymbianOS and MeeGo a year before they had any Windows Phone product to ship, living on cash in the bank and cash from Microsoft, now makes sense. That's not bumbling at all. Elop was sent there to intentionally damage Nokia's smartphone business, but not kill it (Symbian wasn't doing great, but Elop's actions had it crashing down two years sooner than it would have with the usual Nokia support), to the point where Microsoft could get it cheap.

          I mean, sure, $5 billion sounds like a lot of money, and they're not getting the patents tossed in, but hell, Microsoft paid $8.5 billion for Skype, and $6 billion for aQuantive . X-Box is still nearly $3 billion in the red, even being somewhat profitable since 2008. Google paid $12.5 billion for Motorola, a troubled company even without Elop's help. Microsoft made $4.7 billion in Q4-FY2013... buying Nokia is basically what they're doing with their summer job money. They had $76.2 billion in cash earlier this summer, much of it tax sheltered outside the USA. So this is an even better deal than most of their other acquisitions.
          Hazydave
          • I see what you're saying but

            "Elop was sent there to damage Nokia's Smartphone business".

            Nokia's Smartphone business was already damaged.

            "Elop's actions had it crashing two years sooner than it would have with the usual Nokia support"

            So your plan was to ride this thing out even longer than Nokia had previously done? Two more years of spending money you don't have on developing competing ecosystems, incredible ad campaigns, tons on research and development and on a long shot OS that would've had to compete against Android and all of the other OEM's that support it? Not to mention the iPhone as well.

            At least with MS the plan the plan for Nokia was to combine the strengths each brought to the table. I thought it was a good idea actually and like the purchase even more.
            Mr. Wet
          • liar liar pabt on fire

            Nokia first WP was Lumia 800 & 700. I know this because I got it after running away from Android virus. I got my Lumia in November 2011, 4 months after launch or so. Elop didn't come in and adopted WP, it was a simple logic & business decision. U want new products in the market with minimum research & cost, off the shelve OS. Choice of WP simple cuz Samsung own Android. Most OEM are reluctant WP vendors and that why HTC loses money
            jonnybr
        • I think most of us saw this coming

          As soon as Nokia announced it was only going to sell Win-Phones it was only a matter of time. Elop figured this as well, I would bet. W8 would drag Nokia down to the point they would be folded into MS giving them the same model as Apple.

          This means:

          - No other phone developer will touch W8 moving forward.
          - No change at all in ability to sell W8 phones.
          - More money to MS for each phone they do sell.
          - Elop becomes a viable candidate to replace Baller - very scary thought, out of the frying pan into the fire.
          KBabcock75
          • Re: giving them the same model as Apple

            Yet, Microsoft is not Apple.
            danbi
          • Thank god dont give them ideas we dont need another Apple

            They want that Apple greed. That's what they want greedy to a fault. Ecosystem really means GreedSystem. Greed system and how hard.
            Altotus
          • Right

            Because the goal of a company is not to provide a product or service and make money - oh, wait that IS the goal!
            athynz
          • But it is pretty obvious they want to be...

            All the moves they are making points to this.

            - Opening MS stores
            - Selling both hardware and Software solutions "Surface RT"
            - Trying to make there products look hip in ads
            - Working on direct markets instead of retailers.
            - Following Apples product line up (Not much choice here)
            - Opening the MS software store

            There is no doubt that MS is trying to leverage Apples success for them self's, the problem is what you stated, MS is not Apple.
            KBabcock75
          • words etc.

            "Trying to make there products look hip in ads" their not there
            "Apples success for them self's" themselves. not them self's

            What is wrong with Ms trying to gain as much market as they can get? They are in business to make money. If they can do it going forward by buying part of Nokia, let them do it. No one is forcing anyone to buy Nokia phones. I had one once 11 years ago, it worked fine. The next time around we switched to Motorola and have M since. Daughter and son had Motorola then and now have come to Samsung, on their own. Wife switched to Sony non-smart phone, I went with Motorola 3-4 years ago, only reason to move on is OS is old and can't do everything. Someday, when I have nothing else to do with my money.
            I have no experience with WP, don't know if I would go that way or not next time.
            dhays
          • words etc.

            "Trying to make there products look hip in ads" their not there
            "Apples success for them self's" themselves. not them self's

            What is wrong with Ms trying to gain as much market as they can get? They are in business to make money. If they can do it going forward by buying part of Nokia, let them do it. No one is forcing anyone to buy Nokia phones. I had one once 11 years ago, it worked fine. The next time around we switched to Motorola and have M since. Daughter and son had Motorola then and now have come to Samsung, on their own. Wife switched to Sony non-smart phone, I went with Motorola 3-4 years ago, only reason to move on is OS is old and can't do everything. Someday, when I have nothing else to do with my money.
            I have no experience with WP, don't know if I would go that way or not next time.
            dhays
          • The world is changing

            Sometimes it is just amazing. Look, everyone says the PC is dead, even though there are 1.5 billion out there and most of them are Windows. So even though those da gone PCs are everywhere and you say they are going away, you hammer MS for changing to support the changes in the market...What??? The world seems to be moving to smaller mobile devices for a lot of chores. They have yet to be able to process and manage data on complex spreadsheets but they are thousands of uses for integrated mobile devices. So, with the premature statements about the death of the PC, why would denigrate MS for looking to expand into other markets? Heck, if this is way you are going to be, you may as well get started on slamming MS Auto. Its in half or more of all the Bluetooth systems in new cars...
            David@...
          • Re: The world is changing

            Like, for example, look there are so many horse carriages around and those silly people say the horse carriages are dead. Some funny 'automobiles' are supposed to take over. But, you require special fuel for the thing, it cannot feed itself off the green grass on the road. When it breaks, a specialist must fix it, wear won't go away after you take good care of the thing, etc.

            Silly people, to predict the death of horse carriages, when there are so many around.
            danbi
          • Not the same...

            There are probably only around 100,000 horse carriages plying the streets across the globe? On the other hand there are around a billion computers out there using Windows. So horse carriages and Windows don't quite equate with each other.
            petin_y@...
      • Nokia was already

        On it's way down the tubes long before Microsoft even glanced at it. Symbian was dying. Of course I guess they could have went down like Blackberry or adopted Android. And of course if they had adopted Android they would have been crushed by the big boys. They stayed on a busted platform too long.
        mikedees
        • Microsoft to buy Nokia's devices, services unit for $7.2B

          before elop got on board, nokia's market is bigger than the combined market of samsung and apple....
          kc63092@...
          • and before...

            the iPhone, Blackberry dominated smartphones so what's your point? There is always a before and 5 years from now there will be another shift.
            thekman58
          • Before... after..

            ...what? Before the iPhone? Before Android? Nokia was always much more prominent overseas anyway, especially in emerging markets. This is a fresh start for them with deep pockets at MS. Good move.
            ryork272