Nokia Interim CEO: Microsoft deal makes us stronger

Nokia Interim CEO: Microsoft deal makes us stronger

Summary: Nokia's interim CEO Risto Siilasmaa says that Microsoft's acquisition of Nokia's device and services unit can only make the firm financially stronger and better able to compete.

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Nokia's interim chief Risto Siilasmaa has said that once Microsoft's acquisition of the Finnish firm's device and services unit is finalized, the company "will continue to have three strong businesses."

In an interview with AllThingsD, the temporary chief, who has taken over from CEO Stephen Elop who will join Microsoft once the acquisition closes, believes the move is the right decision for the once-dominant handset maker.

Siilasmaa commented:

"We will continue to have three strong businesses. Overall we are very happy with the fact we will be able to support those businesses with a much stronger balance sheet."

On Monday, Microsoft announced its intentions to buy Nokia's mobile division for about $5 billion (€3.79bn), with an additional $2.17 billion (€1.65bn) to be spent on licensing Nokia's extensive patent portfolio.

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 | Microsoft-Nokia deal: 11 quick facts | Microsoft to buy Nokia's devices, services unit for $7.2B

The Finnish firm is left with its networking equipment division, patent portfolio and HERE location-based services industry. Microsoft will license the company's 8,500-strong design patent portfolio in addition to Nokia's 30,000 utility patents. Microsoft says that the change in terms will result in better mobile device profits by increasing a gross profit margin of less than $10 per Windows Phone sold to over $40 per unit. In addition, the Redmond giant will pay Nokia annually for mapping data, and Nokia will refine HERE applications for cross-platform support.

While the deal will potentially see Microsoft becoming a stronger force in the smartphone sector -- and granting the Windows Phone and app ecosystem a much-needed boost -- Nokia will become a far smaller, focused firm after losing out to rivals including Samsung and Apple in the modern mobile device market and jumping ship.

See also: Does its Nokia buy thwart or fuel a possible Microsoft break-up?

Within the interview, Siilasmaa insisted that the company's employees would benefit from the sale. Nokia currently hires roughly 88,000 members of staff, 32,000 of whom will be transferred to Microsoft's new division once the deal is complete.

Speaking to The Financial Times, the temporary chief, while the company looks for a permanent replacement for Elop, said:

"After a thorough assessment of how to maximise shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders."

Siilasmaa admitted that negotiations began in late January or early February, and the Nokia board had met over 50 times to discuss the possibilities of a deal.

The Microsoft-Nokia acquisition, which requires regulatory approval and acceptance from shareholders of both companies, is expected to close in the first quarter of 2014. 

Topics: The Microsoft-Nokia Deal, Microsoft, Mobility, Nokia

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5 comments
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  • Empty words

    This buy, represents a huge failure for Nokia. They were unable to compete in the smartphone market and are giving up on it.
    Mobile devices are generating huge amount of money, they made Apple the most valuable IT company. The market still growing and represents a huge opportunity for the ones that can do right.
    Nokia was in the first position to take the mobile world by storm, having about half of the smartphone market a few years ago, they have less than 5% now.
    AleMartin
  • Before Nokia Embraced Windows Phone...

    ...it had 33% smartphone market share, and Microsoft had 5%.

    Today, their combined market share is 4%.
    ldo17
    • Nokia never had a smartphone before Windows Phone

      Neither did MS. They had a combined 0% of the market. Nothing with Symbian or meego or windows mobile on it was ever a smartphone. Now they're up over 20% in some markets and over 10% in many more even with android and ios to compete against and with a growth path to see that double in another year.
      Johnny Vegas
      • Are you trolling?

        Symbian and MeeGo are far more superior to Windows Phone when it comes to "smartphone" features.
        Karl Hummer
        • Where can I buy one?

          Mr. Hummer wrote, "Symbian and MeeGo are far more superior to Windows Phone when it comes to 'smartphone' features."

          Symbian once ruled the mobile world, but Nokia has since revoked its once open license, transferred support to Accenture, and announced earlier this year that there will be no more Symbian phones.

          The most recent posting on MeeGo's web site is two years old and reports it was dumped (forked?) by the Linux Foundation in favor of a Samsung/Intel project called Tizen. Samsung is doing fairly well with its Galaxy series that does not run Tizen. Someday a major US carrier might offer a Tizen phone. Mir, another MeeGo fork, is the base of Sailfish by a Finnish company called Jolla. Someday a major US carrier might offer a Sailfish phone.

          If I go into any major US carrier's retail store I can find Windows phones without too much trouble after passing by the more prominent Android and iOS displays. My number one requirement for a smartphone is to be able to pay money to a major US carrier and then own one with reliable cellular service.
          AES2