Helsinki 04th September 2013 : Microsoft Corp. is set to buy Nokia Corp.’s mobile phone business for $7.2billion in an effort to strengthen its competition with Apple Inc. and Google Inc and Nokia will also license its portfolio of patents and mapping services to Microsoft.
Microsoft chief executive Steve Ballmer described the deal as “It’s a bold step into the future, a win-win for employees, shareholders and consumers of both companies.”
Microsoft expects the deal to be finished by early 2014, when about 32,000 Nokia employees will transfer to Microsoft. Microsoft currently has about 99,000 employees.
Microsoft has struggled as users have ignored traditional PCs and laptops in favour of smartphones and tablet PCs. The deal characterizes the company’s wish to change itself from a software maker into a more flexible company that provides any type of Internet-connected gadget services.
The expected price includes $5 billion for the Nokia unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software.
Nokia was mobile phones leader before, but its sales dropped 24% in the three months to the end of June from last year. The firm sold 53.7 million mobile phones during the quarter, down 27% on last year. However, sales of its new Lumia phones, which run a Microsoft operating system increased during the period.
Nokia also announced changes to its leadership team as a result of the sale. Stephen Elop will step down as president and chief executive of Nokia Corporation with board chairman Risto Siilasmaa taking over his duties as an interim CEO.
Microsoft CEO Steven Ballmer Ballmer said Tuesday. “Finland will become the hub and center for our phone R&D and we are counting very much on the incredible talent of Nokia employees to be a key part of driving and propelling Microsoft forward.”
The new deal shows the second most costly purchase in Microsoft’s 38-year history. $8.5 billion purchase of Internet calling and video conferencing service Skype was the most expensive one.