Microsoft buys up Nokia’s handsets

published 5 September 2013

Microsoft is to buy Nokia's mobile handset division for €5.44bn (£4.6bn). The software giant is paying €3.79bn for the Finnish firm's mobile operations and €1.65bn to license its patents for ten years. Microsoft will also provide the struggling company, which made a $4bn loss in 2012, with a €1.5bn financing facility. Nokia's chief executive, Stephen Elop, formerly of Microsoft, will rejoin the US giant and is tipped to replace Steve Ballmer.

Nokia's shareholders are clearly keener on the deal than Microsoft's. Microsoft shares fell 4.5% on Tuesday wiping $11bn off its value while Nokia's gained 34%. Investors fear Microsoft will struggle to compete with Apple and Samsung in the smartphone market.

What the commentators said

"Tragedies end badly," agreed Lex in the FT. Nokia was worth more than €200bn in 2001. Now it is flogging its core business for just €5.4bn. This is "value destruction of a rare order". Nokia's investors "should be spitting, not relieved". And it's not a great deal for Microsoft either, said Rolfe Winkler in The Wall Street Journal. Steve Ballmer couldn't leave his replacement without a smartphone strategy, so he "had to buy a chunk of Nokia". But it's an admission of weakness. Without Nokia, Microsoft would lose its "toehold" in the smartphone market. The deal is "pretty small" against Microsoft's $61bn cash, but "it had little choice but to do it anyway".