Posted on 5/09/2013 by David Petrik
Announced on September 3rd, Microsoft has made their intent public on the acquisition of Nokia Mobile and Services for $7.2 billion USD, which is set to be finalized by the end of Q1 2014. The big question is, what does this mean for Nokia?
Nokia Solutions and Networks is what Nokia will be left with which is an $18 billion USD a year money maker and which partly comes from Nokia’s acquisition of Siemens AG last month. Nokia’s stock surged up 34 percent following the announcement that it will end its historic romp in the mobile industry.
“The new Nokia isn’t sexy and won’t have spectacular growth, but it won’t suffer from spectacular failures either,” Daniel Lacalle, a senior portfolio manager at Ecofin Ltd. In London. “Nokia will be much more competitive as it won’t waste money anymore.”
This isn’t the first time we have seen a famous mobile brand leave the market, nearly 10 years ago, Ericsson took a different path selling their mobile division and partnering up with Sony to become Sony Ericsson which Sony completely bought out earlier this year. That partnership ended up cutting over half Ericsson’s employees, which leaves us wondering what will happen to Nokia Mobile and Services employees?
About 32,000 employees — of whom 4,700 are in Finland will transfer to Microsoft, and Nokia Chief Executive Officer Stephen Elop will return to Microsoft after a three-year stint running the Finnish manufacturer. Layoff estimates have yet to surface, but based on past similar acquisitions the amount could be staggering.
Our final thought is, “What did Microsoft actually buy?” Microsoft has essentially bought anything to do with Mobile Devices in a nutshell. This includes Nokia’s smartphone range, “Lumia” which runs solely on Windows Phone OS owned by Microsoft and “Asha” which is Nokia’s entry level “feature phone” brand which continues to sells millions of handsets in developing nations like South America and the South-East Asia. From this point on, there will never be another Nokia handset.