Microsoft In Talks To Buy Nokia's Smartphone Division?

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Microsoft In Talks To Buy Nokia's Smartphone Division?

Posted by samzenpus on Thursday January 5, 2012 @12:18PM from the how-much-were-you-asking? dept.

lightbox32 writes "Analyst Eldar Murtazin announced today that Microsoft chief executive Steve Ballmer was soon to meet his Nokia counterpart Stephen Elop to finalize the purchase of Nokia's smartphone division, which would see patents, staff, and some plants transferred to Microsoft, for an undisclosed price. From the article: '“Steve Ballmer, Andy Lees and Stephen Elop and Kai Ostamo will meet in Las Vegas to finalize agreement about Nokia smartphone unit. Bye Nokia,” he tweeted on Thursday morning."

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This story is a lie by DCTech · 2012-01-05 12:18 · Score: 5, Informative

Nokia already said that they won't sell their smartphone division several hours ago. Why is this rumor still echoed on slashdot?
1. Re:This story is a lie by sconeu · 2012-01-05 12:20 · Score: 5, Informative
  
  About to post the same thing.
  http://www.theregister.co.uk/2012/01/05/nokia-will-sell-crown-jewels-to-microsoft/
  
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2. Re:This story is a lie by Microlith · 2012-01-05 12:20 · Score: 5, Insightful
  
  Because companies deny everything up until it happens.
3. Re:This story is a lie by leoplan2 · 2012-01-05 12:30 · Score: 5, Insightful
  
  They will keep denying that rumor... If they accept it, it will be a huge PR disaster...
4. Re:This story is a lie by Tridus · 2012-01-05 12:42 · Score: 5, Insightful
  
  Because no company has ever denied something right up until it happened, right?
  Nokia denying it means absolutely nothing.
  
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Re:Apple? by Dan+East · 2012-01-05 12:31 · Score: 5, Interesting

Microsoft was in the phone business before Apple, albeit only from the software side. Microsoft missed some huge, huge opportunities in that arena. If only they could've ditched the stylus-centric GUI design (ie itty bitty tiny controls and no gestures) they could've held at least some ground with Windows Mobile.

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Not plausible by Gadget_Guy · 2012-01-05 12:43 · Score: 5, Insightful

Is there any point in posting an unsubstantiated rumour by someone who has previously claimed that the deal was happening back in May and that Nokia's phone division would be sold by the end of 2011? Nokia is predominantly a phone maker, and I really can't see them wanting to sell the main business of their company to anyone. What would be left of the company?
And would Microsoft really want to spend the claimed $19 billion on a division that has yet to prove that anybody wants to buy one of their Windows phones? And Nokia have the connections with the carriers that is required to get the phones into the retail system. Given the way Windows phones haven't really been pushed by the carriers, I would think that they need the sales team at Nokia. Buying the patents and manufacturing plants only solves part of the problem - and that assumes that there is a problem in the first place that requires the purchase.
Finally, I don't think the other phone companies like HTC, LG, and Samsung would feel happy about Microsoft moving into their territory. This sale would only cause friction with those companies, is an expensive risk, and provides no benefit considering that Nokia are already committed to selling Microsoft's platform now.
1. Re:Not plausible by Microlith · 2012-01-05 12:53 · Score: 5, Insightful
  
  Is there any point in posting an unsubstantiated rumour by someone who has previously claimed that the deal was happening back in May and that Nokia's phone division would be sold by the end of 2011?
  Eh, if it happens in the next couple months he's not far off in corporate-acquisition-time. He nailed the forced move of Nokia to Windows Phone back months before it happened and people said the same things about him then.
  
  Nokia is predominantly a phone maker, and I really can't see them wanting to sell the main business of their company to anyone. What would be left of the company?
  Nothing, but I suspect that Microsoft is, by far, the party with the most power here. They have a friendly CEO in charge and a pliable board, willing to do as they say. What would be left? A shell of a company, loaded down with restrictions that would bar them from entering the smartphone space and, for spite, from ever using the patents they sell with Linux.
  
  And would Microsoft really want to spend the claimed $19 billion on a division that has yet to prove that anybody wants to buy one of their Windows phones? And Nokia have the connections with the carriers that is required to get the phones into the retail system. Given the way Windows phones haven't really been pushed by the carriers, I would think that they need the sales team at Nokia. Buying the patents and manufacturing plants only solves part of the problem - and that assumes that there is a problem in the first place that requires the purchase.
  If they do it, I imagine they could always work out a "discount" of some sort. But most importantly, they have someone who can part the company out to get MS the best deal, rather than having to buy the whole company and all the stuff they don't want (dumbphones, symbian, the N9/Maemo legacy.) Microsoft would probably redouble their efforts to be like Apple, which is why they'd probably also take all the sales teams as well.
  
  Finally, I don't think the other phone companies like HTC, LG, and Samsung would feel happy about Microsoft moving into their territory. This sale would only cause friction with those companies, is an expensive risk, and provides no benefit considering that Nokia are already committed to selling Microsoft's platform now.
  If I were going to fling (more) barbs in Microsoft's direction, I expect they'd leverage the patents they have to raise the "price" of Android even further above Windows Phone 7, and constrain the options of other vendors so that they have no choice but to compete directly with MS or pay them a ton of cash.
2. Re:Not plausible by Junta · 2012-01-05 13:00 · Score: 5, Interesting
  
  On the first part, I would have no trouble believing that Nokia would sell themselves completely to MS. I wouldn't think selling their phones separately would ever happen, but Nokia is pretty well going to do anything that MS asks of them at this point unless their leadership changes away from the MS cronies in place now.
  Which makes this story even less plausible, why would MS buy the cow while they get the milk for free? In Nokia they have a partner that is pretty well willing to bet their whole business on MS and do exactly what MS would have them do if they owned them, without the complications of an acquisition, particularly in fairly MS-hostile territory of EU.
  In terms of other manufacturers being 'happy' with MS, I think the handset makers are likely not particularly pleased with how the WP7 ecosystem is set up anyway. By design, the hardware manufacturers are relegated pretty much to producing the exact same equipment with the same exact software, chips and screens as their competitors. There is pretty much zero room in the WP7 ecosystem for any differentiation, making it pretty much a pure commodity business with race-to-the-bottom margins. I think MS has most of them scared enough to at least participate by making a few handsets to hedge their bets in case of an Android collapse, but there seems to be pretty much no enthusiasm among manufacturers or carriers with MS and Nokia the only ones actively really *pushing* the platform.
  
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3. Re:Not plausible by Microlith · 2012-01-05 13:57 · Score: 5, Insightful
  
  But Nokia lacked direction the with Maemo which got merged with Intel's Moblin to become MeeGo.
  They produced the N9, which was "MeeGo compatible" and based on Maemo. It has apparently sold quite well and met with extremely favorable reviews. They had a direction and had to fight to get where they did due to the Symbian camps in the company interfering. Had that problem been solved and Maemo/MeeGo been pushed to the forefront instead of WP7, I doubt that Nokia's ability to compete would have been questioned. Problem is that would take a CEO with a vested interest in Nokia's success and independence and I don't believe Elop ever had that.
4. Re:Not plausible by symbolset · 2012-01-05 16:04 · Score: 5, Interesting
  
  Microsoft needs Nokia more than Nokia needs Microsoft.
  This is not true. Microsoft spins off many billions of profit each year, mainly from Windows and Office. They could dump 5 billion a year into mobile just to keep the dream alive. They pour something like 2 billion a year just into Bing and their other online efforts. They could keep this up forever. I don't think doing so is going to do them any good, but they can.
  Sendo had the same problem. It didn't work out well for them.
  While doing research for this comment (sad but true, I do research for /. comments as if I were an actual credible analyst) I went to look at Nokia's financial statements to see how long they could hold out with a failing smartphone business. What I found is a grand surprise: I find that Nokia has been hugely bulking up the cash portion of their balance sheet. They now have $16B cash and equivalents - a level they haven't seen since 2008 when their market cap was 3x what it is now (Currently $20B), and $4B more cash than they had a year ago. The annual run rate on last quarter's profits is $10B. That means less cash you could buy the Nokia business for $4B net of cash - patents, employees, hardware, manufacturing, real estate, the whole magilla. This brings the price of Nokia's earnings as a business (about $10B/year) less cash to about 40 cents. For 40 cents a buyer could buy $1/yr of profits. $1 buys what the company is accumulating in cash each year. That's a screaming deal - and with that much cash to leverage lots of the '80's LBO kings could get financing on that deal. It's a hell of a lot better deal than $8B for Skype, who never made any profits ever.
  After reflecting on the above paragraph, TFA becomes plausible. Somebody's probably buying Nokia because at this price it's like buying a money tree at the price of five months' harvest. I see that you can buy a call option with a 7/21/2012 strike price of $6 for $.71, or the in-the-money $5 call for $1.14. Both of these look like a good deal to me, and I'd probably take the in-the-money one in case there was no bidding war. Naturally takeovers usually buy a company at a premium over the day's stock price.
  I am not an investment advisor - especially not yours. I don't hold a position in any of these companies. This is just for fun.
  If Google can buy Moto Mobi and get away with it, why can't Microsoft buy Nokia - especially when it's such a screaming deal?
  Despite what the market thinks of Elop's plans (and my own prognostications) his austerity program does seem to be bearing fruit even if his strategic choices seem to be lacking.
  
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Re:Apple? by roc97007 · 2012-01-05 12:46 · Score: 5, Interesting

> If only they could've ditched the stylus-centric GUI design (ie itty bitty tiny controls and no gestures)
That's right on the money, (from an ergonomic standpoint, how did anyone ever think a "start" button an eighth of an inch wide was a good idea?? [1]) although I'm not sure it's a complete explanation. My Windows 6 phone would fail periodically with a popup something like "the audio driver has encountered an unexpected error and will now terminate". If you didn't catch it when it happened and reboot the phone, on the next call the phone wouldn't ring.
Let's savor that for a moment.
The phone wouldn't RING!!
The second or third time I failed to get a call while on-call, due to the audio driver malfunctioning, I had to dump the phone or risk losing my job.
As a result, I will never, ever, EVER have another Windows phone. In my line of work it's just too risky to have a phone that may at some random time decline to RING.
Ok, so I could be the only one to ever have that problem or problems like it, but if not, Windows 7 has a huge uphill battle to gain acceptance in the business market.
[1] From a code reuse standpoint, it makes perfect sense.

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Re:But... by Nerdfest · 2012-01-05 13:09 · Score: 5, Informative

It means he's done enough damage to the stock price to make it affordable. It amazes me that what they did is considered legal.
Re:Apple? by Anonymous Coward · 2012-01-05 13:13 · Score: 5, Interesting

You are definitely not the only person to have that happen to them; I had the exact same issue, and made the exact same decision, including the promise to never buy a Windows Mobile product again.
I also had the fun error that my Windows phone would randomly end calls. I would be happily chatting away and the phone would just hang up. I would joke "Windows has found your conversation tiresome and no longer wishes to continue," (said in a German accent).
Try explaining to your boss why you almost never pick up when he calls, and then when he does call you, you hang up on him.
Windows Mobile was far and away the worst phone experience I have ever had, and it soured me on Windows phone products forever.