Quantcast
Latest Stories

Nokia stock surges on Microsoft takeover



Standing together are from left to right, Nokia’s new CEO Timo Ihamuotila, Chairman of the Board Risto Siilasmaa and former Nokia CEO Stephen Elop, during the press conference of the Finnish mobile manufacturer Nokia in Espoo, Finland on Tuesday, Sept. 3, 2013. Microsoft has announced a takeover of the Finnish mobile phone company Nokia in a deal reported to be worth some 5.44 billion euros (US dlrs 7.2 billion). AP

HELSINKI — Microsoft Corp. is buying Nokia Corp.’s line-up of smartphones and a portfolio of patents and services in an attempt to strengthen its fight with Apple Inc. and Google Inc. and capture a slice of the lucrative mobile computing market.

The 5.44 billion euros ($7.2 billion) deal announced late Monday marks a major step in the company’s push to transform itself from a software maker focused on desktop and laptop computers into a more versatile and nimble company that delivers services on any kind of Internet-connected gadget.

“It’s a bold step into the future — a win-win for employees, shareholders and consumers of both companies,” Microsoft CEO Steven Ballmer told reporters at Nokia’s headquarters in Finland Tuesday. “It’s a signature event.”

Microsoft, based in Redmond, Wash., has been racing to catch up with customers who are increasingly pursuing their digital lives on smartphones and tablet computers rather than traditional PCs. The shift is weakening Microsoft, which has dominated the PC software market for the past 30 years, and empowering Apple, the maker of the trend-setting iPhone and iPad, and Google, which gives away the world’s most popular mobile operating system, Android.

Microsoft is now betting it will have a better chance of narrowing the gap with its rivals if it seizes complete control over how the mobile devices work with its Windows software.

Investors in Nokia welcomed the deal, sending shares in the company up more than 35 percent to 4.03 euros in Helsinki. Microsoft’s shares, however, were down 4.4 percent at $31.93 in early trading in the U.S.

Speaking to investors and analysts Tuesday, Ballmer admitted that the company has to play catch-up with the likes of Apple and Android.

“We know we need to accelerate. We’re not confused about that,” he said.

“We need to be a company that provides a family of devices.”

Nokia, based in Espoo, near the Finnish capital, and Microsoft have been trying to make inroads in the smartphone market as part of a partnership forged in 2011. Under the alliance, Nokia’s Lumia smartphones have run on Microsoft’s Windows software, but those devices haven’t managed to compete with iPhone or the array of Android-powered devices spearheaded by Samsung Electronics’ smartphones and tablets

Terry Myerson, Microsoft Executive Vice-President of Operating Systems, admitted to a call to investors Tuesday that the message about company’s products hasn’t been getting through to consumers and that “marketing approaches we’ve used in the past have been inefficient.”

The acquisition is being made at the same time that Microsoft is looking for a new leader. Just 10 days ago, Ballmer, 57, announced he will step down as CEO within the next year.

Stephen Elop, who left Microsoft in 2010 to become Nokia CEO, will step down as president and CEO of the company to become executive vice president of Nokia devices and services and will rejoin Microsoft once the acquisition closes.

The deal has fueled speculation that Elop, a former Microsoft executive, will emerge as a top candidate to succeed Ballmer.

Nokia board chairman Risto Siilasmaa told reporters that they had been preparing the deal since February.

“It’s been an extremely pragmatic and deeply analytical process where we have left no stone unturned to understand all the possible alternatives for the company going forward,” said Siilasmaa, who will be Nokia’s interim CEO.

Microsoft hopes to complete the deal early next year. If that timetable pans out, about 32,000 Nokia employees will transfer to Microsoft, which currently has about 99,000 workers.

The proposed price consists of 3.79 billion euros ($5 billion) for the Nokia unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software. Another 1.65 billion euros ($2.2 billion) will be paid for a 10-year license to use Nokia’s patents, with the option to extend it indefinitely. Ballmer said that Microsoft will invest more than $250 million in a new data center to serve European consumers.

Nokia CFO Timo Ihamuotila said the company’s future will center on its mobile networks business and two smaller units — HERE mapping services and the advanced technologies unit including Nokia’s licensing business.

“Our aim is clearly to grow the networks business in a profitable way,” he said in a call to investors. “It is a cash-generating business where we can invest into the future growth.”

Nokia will continue to own the rights to its brand, but the deal between the two companies prevents it from venturing into a separate smartphone business until the end of 2015.

Neil Mawston from Strategy Analytics said the move was good for Nokia’s shareholders but did not change much for the ailing Finnish firm which has lost significant market share.

“Nokia is still heavily dependent on Microsoft’s software capabilities and Microsoft continues to lag the market like it has done in the last few years,” Mawston said. “Not much will change whether Nokia is inside or outside the Microsoft portfolio.”

The deal with Nokia represents the second most expensive acquisition in Microsoft’s 38-year history, ranking behind an $8.5 billion purchase of Internet calling and video conferencing service Skype. Tony Bates, who ran Skype, is also regarded as a potential successor to Ballmer.

The money to buy Nokia’s smartphones and patents will be drawn from the nearly $70 billion that Microsoft held in overseas accounts as of June 30.

Related Story:

Microsoft buying Nokia’s devices and services unit


Follow us on Facebook Follow on Twitter Follow on Twitter




Recent Stories:

OFW from UAE tests negative for MERS-Cov–health chief 49 mins elapsed Korea ferry captain arrested, divers spot bodies 2 hours elapsed Duke’s Rodney Hood joining Jabari Parker in NBA draft 2 hours elapsed Phelps entered in 3 events at comeback meet 2 hours elapsed Boston prepares for huge wave of marathon visitors 2 hours elapsed Motivated LeBron James preps for postseason 3 hours elapsed Enrile chief aide back in PH ‘to face charges’–report 3 hours elapsed Multicultural flock marks Good Friday in San Francisco 4 hours elapsed
Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Microsoft , Nokia , Nokia Corp. , Steven Ballmer

  • indiosbravos2002

    Nokia is better known for as a maker of non-smartphones. They didnt anticipate the deluge of cheap tablets and smartphones from China and South Korea that washed their msrket shares away. Wala na ngang sale sa smartphones, nawalan pa ng market sa stupid phones. Loser!!!

  • DestronLeader

    It shouldn’t come as a surprise that in the near future, we will see greater synergy between Microsoft and Nokia products.

    • Bulagas

      or you see both of them disappear into oblivion :)

  • Zim

    I wish success to these two giants. I just hope they keep Nokia name on phones.

  • Bulagas

    Elop was likely sent to Nokia to destroy value and let microsoft buy the place at discounted rates….. .good job Elop

    • walangusername

      a trojan horse perhaps.



Copyright © 2014,
.
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement Advertisement
  1. Nasa’s moon-orbiting robot crashes down
  2. Did Deniece Cornejo lambast Vhong Navarro on social media?
  3. Netizens seethe over Aquino’s ‘sacrifice’ message
  4. Mommy Dionisia sings ‘Riking Bull,’sends netizens ablaze
  5. Netizens pay respects to Gabriel Garcia Marquez
  6. Facebook rolls out ‘nearby friends’ feature
  7. Nokia recalls 30,000 chargers for Lumia 2520 tablet
  8. Taylor Swift tries video blogging, crashes into fan’s bridal shower
  9. ‘Virtual’ 10-year-old Filipina snares 1,000 webcam sex tourists
  10. Filipinos #PrayForSouthKorea
  1. Did Deniece Cornejo lambast Vhong Navarro on social media?
  2. Mommy Dionisia Pacquiao scores, takes over social media
  3. Mommy Dionisia sings ‘Riking Bull,’sends netizens ablaze
  4. Memes flourish after Pacquiao victory
  5. Nude and so dangerous
  6. Netizens react to Pacquiao’s victory over Bradley
  7. IT technician found guilty of defrauding firm of P130,000
  8. Netizens seethe over Aquino’s ‘sacrifice’ message
  9. Philippines may watch ‘blood moon’ online
  10. Online-addicted man arrested over son’s death
  1. #RejectedBbPilipinas2014Questions flood Twitter
  2. Did Deniece Cornejo lambast Vhong Navarro on social media?
  3. Netizens fall in love with Crimea prosecutor Natalia Poklonskaya
  4. Mommy Dionisia Pacquiao scores, takes over social media
  5. Nude and so dangerous
  6. Mommy Dionisia sings ‘Riking Bull,’sends netizens ablaze
  7. Russia tries to curb Crimean prosecutor’s Internet fame
  8. Memes flourish after Pacquiao victory
  9. Why didn’t missing jet passengers use their cellphones?
  10. Netizens thank Capa for Lee arrest

News

  • Korea ferry captain arrested, divers spot bodies
  • Enrile chief aide back in PH ‘to face charges’–report
  • Pakistan library named ‘bin Laden,’ as memory fades
  • US teacher fired over comment on black president
  • Magnitude-7.5 earthquake shakes Mexican capital
  • Sports

  • Duke’s Rodney Hood joining Jabari Parker in NBA draft
  • Phelps entered in 3 events at comeback meet
  • Boston prepares for huge wave of marathon visitors
  • Motivated LeBron James preps for postseason
  • Nadal ousted by Ferrer in Monte Carlo quarters
  • Lifestyle

  • Levine designs womenswear with help from fiancee
  • Gabriel Garcia Marquez, Nobel laureate, dies at 87
  • Ford Mustang turns 50 atop Empire State Building
  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • Entertainment

  • Myx TV premieres Asian American ‘docu-series’
  • A nutty finale for ‘Scandal,’ TV’s craziest show
  • EXO postpones release of mini album ‘Overdose’
  • ‘X-men’ filmmaker slams ‘fabricated’ sex attack claims
  • Singer Chris Brown’s bodyguard on trial in DC
  • Business

  • US commerce secretary spells out economic facet of ‘pivot to Asia’
  • Italy sells luxury state cars on eBay
  • Asian shares mostly up in quiet trade
  • Dollar up in Asia on US jobs data, Ukraine deal
  • Barbie doll has a problem
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • OFW from UAE tests negative for MERS-Cov–health chief
  • Multicultural flock marks Good Friday in San Francisco
  • Las Vegas ‘Pinoy Pride’ fest hails Filipino heritage
  • Marking Jesus’ journey on Good Friday
  • Filipina accomplice arrested for fake bills in Malaysia
  • Advertisement
    Marketplace