Nokia, after facing a lot bad period, said it was selling its beleaguered mobile phone unit to Microsoft for $7.17 billion (5.44 billion euros) as the US tech giant tries to fight back against rivals Apple and Google. Nokia cell phones demands were gradually decreasing day by day and after facing this stymie, Nokia put this statement.
However,Investors cheered the news, as Nokia’s share price soared by 45% in opening trading on the Helsinki stock exchange to 4.3 euros.
Nokia, once the world’s leading mobile phone maker, will grant the US software giant a 10-year non-exclusive licence to its patents and will itself focus on network infrastructure and mapping services, which it called “the best path forward for Nokia and its shareholders.”
With Tuesday’s announcement, Microsoft is following in the footsteps of its internet rival Google, which already invested in hardware when it bought US phone manufacturer Motorola.It is end of mobile giant Nokia’s days as a phone maker.
Top 10 points in Microsoft-Nokia Deal
- Microsoft is buying Nokia’s devices and services business, and getting access to the company’s patents, for a total of 5.44 billion euros ($7.2 billion). The deal is divided between the phone making unit and Nokia’s patents. Microsoft will further spend $5 billion on the phone making unit, and $2.17 billion on licensing Nokia’s patents.
- Microsoft will acquire Nokia’s Smart Devices business unit, including the Lumia brand and product. Microsoft is also acquiring Nokia’s Mobile Phones business unit, which serves hundreds of millions of customers worldwide, and had sales of 53.7 million units in the second quarter of 2013. Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products. Nokia will continue to own and manage the Nokia brand.
- Nokia CEO Stephen Elop, a former Microsoft executive, will return as the company’s board ponders a successor to current CEO Steve Ballmer, who will depart sometime in the next 12 months. As part of Microsoft, Elop will head an expanded Devices unit. Julie Larson-Green, who in July was promoted to head a new Devices and Studios business in CEO Ballmer’s grand reorganization, will report to Elop when the deal is closed, scheduled for the first quarter of next year. Elop is expected to join Microsoft at the close of the transaction, along with several Nokia vice presidents.
- Apart from Elop, Microsoft will also acquire the likes of Jo Harlow, who will continue to lead the Smart Devices team; Timo Toikkanen, who will continue to lead the Mobile Phones team; Stefan Pannenbecker, who will lead Design, and Juha Putkiranta, who will lead the integration effort on Nokia’s behalf.
- Under the terms of the agreement, Microsoft will acquire substantially all of Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services-related production facilities, Devices & Services-related sales and marketing activities, and related support functions.
- Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements.
- Microsoft also announced that it has selected Finland as the home for a new data centre that will serve Microsoft consumers in Europe. The company said it would invest more than a quarter-billion dollars in capital and operation of the new data center over the next few years.
- Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement in perpetuity. In addition, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.
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