Microsoft-Nokia Deal
Microsoft took a bold move on 3 September 2013 that could change its view completely. Microsoft wants to recreate itself as a company that offers ‘devices and services’ and it has a built an important step towards that direction. Board of directors of both companies decided to take part in a transaction that will see Microsoft purchasing all devices, patents, licenses, and service businesses owned by Nokia. Microsoft made this move in line with their partnership promise made in February 2011 as well the increasing popularity of Nokia’s Smartphones. This acquisition, unified branding, increased synergies, and faster innovation will allow Microsoft to grow its profits and share in small devices. On the other, this transaction will allow Nokia to gain better sales, a strengthened financial standing, and a solid foundation for forthcoming investments.
The transaction, under the agreement made between the two companies, will cost Microsoft a total of $7 billion. Microsoft hopes to draw cash from its foreign resources to fund this transaction, which forecasts purport will close in 2014’s first quarter. However, shareholders from Nokia’s side, regulations, and other conditions may affect the transaction closure dates. Although Microsoft will bring Nokia, its design, manufacturing rights, and distribution privileges into its fold, it will not submerge all aspects of Nokia. More specifically, this transaction involves Nokia’s Smartphones and devices unit. This unit includes the Lumia Smartphones, a brand that operates on Microsoft’s windows eight operating systems, as well as the Nokia’s Asha phones.
Microsoft will benefit from the acquisition significantly particularly in the Smartphones and devices market. The benefits that the company receives from Nokia present equal importance as the resources it offers. The action made by these two companies