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End of an era: Nokia sells handset biz to Microsoft

Posted: 04 Sep 2013     Print Version  Bookmark and Share

Keywords:Nokia  handset  Microsoft  acquisition 

Nokia Corp. has agreed to sell its struggling handset business to software giant Microsoft Corp in a deal valued at Rs.42,574.85 crore (€5.44 billion).

Under the terms of the agreement, Microsoft will purchase substantially all of Nokia's Devices & Services business for pay Rs.29,609.38 crore (€3.79 billion), licence Nokia's patents Rs.12,890.63 crore (€1.65 billion), and licence and use Nokia's mapping services.

While Microsoft will acquire Nokia's handset business, including the Lumia and Asha phone brands and a licensing agreement with Qualcomm, Nokia's continuing business will focus on its remaining businesses that enable mobile communications. These are NSN, formerly known as Nokia Siemens Networks, a provider of network infrastructure and services; HERE mapping and location services; and its technology development and licensing group.

Nokia will retain its patent portfolio and will grant Microsoft a 10-year licence to its patents at the time of the closing. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Microsoft will become a strategic licencee of the HERE platform, and will separately pay Nokia for a four-year licence.

As part of the deal, Nokia CEO Stephen Elop, and other senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber are expected to transfer from Nokia to Microsoft.

At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide. "The operations that are planned to be transferred to Microsoft generated an estimated Rs.1.16 lakh crore (€14.9 billion), or almost 50 per cent of Nokia's net sales for the full year 2012."

"For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter," said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today's announcement, Nokia Interim CEO. "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."

Nokia, which ruled the mobile phone market for 14 years, has been struggling ever since smartphone came into town. The Finish firm faced severe competition from Apple and Samsung in past few years, which also reflected in its earnings. In an attempt to reverse the trend Nokia announced in February 2011 that it would adopt the Windows Phone platform from Microsoft as its primary platform. Although Nokia has had some success with its Lumia brand, it has not been enough to pull the company into consistent profitability.

In addition, Microsoft announced that it would spend more than Rs.1,497.01 crore ($250 million) over the next few years building a data centre in Finland to serve Microsoft customers in Europe, with the potential for future expansion.

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