Troubled Nokia officially sells cellphone division to Microsoft
Between a major downtick in sales and an identity crisis, on Friday Nokia closed a deal to sell its cellphone and services division to Microsoft. What's on the horizon for both companies now that the deal is done?
Nokia said Friday it has completed the $7.5 billion sale of its troubled cellphone and services division to Microsoft Corp., ending a chapter in the former world leading cellphone maker's history that began with paper making in 1865.
The closure of the deal, which includes a license to a portfolio of Nokia patents to Microsoft Corp., follows delays in global regulatory approvals, and ends the production of mobile phones by the Finnish company, which had led the field for more than a decade, peaking with a 40-percent global market share in 2008.
Nokia said the total transaction price would be "slightly higher" than when it was originally announced on Sept. 3 because of adjustments made for net working capital and cash earnings. The deal was to have closed during the first quarter but was held up because of delays in regulatory approvals worldwide.
The company will now focus on networks, mapping services and technology development and licenses, and said it will give more details of the deal and future plans when it releases first-quarter earnings on April 29 — the last report to include the ailing devices and services division.
"The new Nokia can now go forward and concentrate on its remaining assets," said Neil Mawston from Strategy Analytics, near London. "It has one of the best IPR (intellectual property rights) assets in the entire industry and it has good mapping services."
Nokia said two plants will remain outside the deal — a manufacturing unit in Chennai, India, subject to an asset freeze by Indian tax authorities, and the Masan plant in South Korea, which it plans to shut down. The adjustments have no impact on the deal and Nokia "will be materially compensated for any retained liabilities," the company said.
Microsoft said it will acquire some 25,000 Nokia employees in 50 countries. More than 4,000 in Finland will transfer to Microsoft and the Nokia headquarters in Espoo, near the Finnish capital, Helsinki, will be taken over by the U.S. giant.
Former Nokia CEO Stephen Elop will serve as executive vice president of the Microsoft Devices Unit, which will include Nokia's former Lumia smartphones and tablets, Microsoft said.
Nokia Corp.'s share price was up more than 1.5 percent at 5.37 euros in afternoon trading in Helsinki.