After a 150 year-old legacy, Microsoft to purchase Nokia's handset business for $7.2 billion
Microsoft Corp said it will buy Nokia Oyj's phone business and license its patents for 5.44 billion euros ($7.2 billion), making its boldest foray yet into mobile devices and bringing executive Stephen Elop back into the fold, Reuters reported.
Nokia chief Elop, a former Microsoft executive, will return as Microsoft's board ponders a successor to current CEO Steve Ballmer, who will depart sometime in the next 12 months after initiating a reorganization intended to transform the software company into a devices and services group in the mould of Apple Inc.
The sale of Nokia's phone business marks the exit of a 150-year-old company that once dominated the global cellphone market and remains one of Europe's premier technology brands, even though Apple and Samsung Electronics' ascendancy all but reduced it to irrelevancy in Asia and North America in recent years.
"For a lot of us Finns, including myself, Nokia phones are part of what we grew up with. Many first reactions to the deal will be emotional," said Alexander Stubb, Finland's minister for European Affairs and Foreign Trade, on his Twitter account.
The sale price of the phone business, at about one-quarter of its sales last year, represented a "fire sale level," according to analyst Tero Kuittinen at consultancy Alekstra, although others disagreed on pricing.
"What should be paid for declining business, where market share has been constantly lost and profitability has been poor?" said Hannu Rauhala, an analyst at Pohjola Bank. "It is difficult to say if it's cheap or expensive." Nokia - reduced to its networks business, navigation offerings and patent portfolio after the sale - is still the world's No. 2 mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.
Sales of Nokia's Lumia series have helped the market share of Windows Phones in the global smartphone market climb to 3.3 percent, according to consultancy Gartner, overtaking ailing BlackBerry Ltd for the first time this year. Still, Google Inc's Android and Apple's iOS system make up 90 percent of the market.
Canadian Elop, hired from Microsoft in 2010, has been cited among the frontrunners to take over from Ballmer, criticized for missing the mobile revolution, kicking off Microsoft's foray into the market with the tepid-selling Surface tablet only in 2012.
Buying Nokia's gadget business thrusts Microsoft deeper into the hotly contested market, despite some investors urging the company to stick to its core strengths of business software and services.
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