Microsoft tumbles following Nokia deal


Microsoft (MSFT) tumbles 4.5% premarket after agreeing to buy Nokia's handset business for $7.2B. The sell side isn't terribly enthusiastic.

"Nokia deal not likely well-received by shareholders," says Rick Sherlund who just upgraded MSFT 10 days ago. "New management is unlikely to simply break up the company."

We see this acquisition as incrementally negative," says Bernstein. Doubling down on mobile phones highlights lack of attention on the enterprise side.

A "hail mary pass," says Oppenheimer's Shaul Eyal. The transaction is a "call option on mobile," he says, where Microsoft stands to maybe see a positive result without risking too much money. The catalysts of a dividend hike, a potential new CEO, and shareholder activism could outweigh any negativity from this deal, he hopes, maintaining his Buy rating and $37 price target.

NOK +45% premarket.

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Comments (33)
  • tiger8896
    , contributor
    Comments (720) | Send Message
     
    I said back before MSFT got into the tablet business that they needed to manufacture their own tablet to compete with Apple but nobody would believe that they could pull it off. Well they did get into the tablet business with their Surface tablet and they didn't pull it off, it was a massive failure.

     

    Buying Nokia an established manufacturer is not going to solve their problems. They'll alienate the other OEMs producing Win8 phones and what makes them think that making Nokia phones under the MSFT umbrella name is going to get them more market share than a joint MSFT/Nokia phone. The only thing they'll get out of this is a new CEO for 7B dollars. BRILLIANT
    3 Sep 2013, 08:26 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    Was a massive failure? They are still selling them and are releasing the Surface 2 next year as well as a Nokia tablet...so talking about it in the past tense wouldn't be correct. The tablet industry hasn't even started yet. There are only a handful of manufacturers and tablets don't even come close to over shadowing PCs in terms of market share yet, so please get some perspective before you call something a failure.
    3 Sep 2013, 10:12 AM Reply Like
  • Chris Lau
    , contributor
    Comments (3965) | Send Message
     
    It was (MSFT)'s plan all along to acquire Nokia assets on the cheap. Elop will be promoted for this, the way a king promotes his knight for a job well done.

     

    This solves nothing for Microsoft. MS will double down on ad spend, R&D, and bleed more cash flow in an attempt to gain market share in mobile.

     

    Very unfortunate that Nokia will disappear like this. Had they adapted Android too, they could have remain independent. A Lumia Android 1000 series on Pureview would have been truly epic.
    3 Sep 2013, 11:37 AM Reply Like
  • gwynfryn
    , contributor
    Comments (6458) | Send Message
     
    They could have remained independent if they'd kept the Asha line; I don't understand this part!
    3 Sep 2013, 12:05 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (18325) | Send Message
     
    It will end in tears for all involved:

     

    Microsoft failed to entice its corporate customers to adopt WP8 phones
    Microsoft will repel those consumers who like the Nokia brand
    Microsoft has made just launched Lumia devices landfill material
    Microsoft will have Nokia talent run for the emergency exits
    Microsoft still has not finalised WP8 OS
    Microsoft fails to attract and retain WP8 app developers
    Microsoft will be the single manufacturer of WP devices
    Microsoft fails to properly propagate and monetise Bing
    Microsoft has betrayed Nokia's workforce

     

    When you just thought, Microsoft does it all wrong with RT and their landfill tablets nobody wants, they up the ante with a blunder several magnitudes higher still.

     

    What is Bill thinking now, I wonder...
    3 Sep 2013, 08:40 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    I will take them all then. Give me two armful scoops worth of tablets and phones and I will be off to S. America and sell them for triple.

     

    Thanks for the idea Andreas!
    3 Sep 2013, 10:13 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (18325) | Send Message
     
    The Nokia South America post was just given to Anderson Teixeira (ex Apple) on 13th August. I wonder what he's thinking now...
    3 Sep 2013, 10:24 AM Reply Like
  • Trader's Profit Compass
    , contributor
    Comments (2071) | Send Message
     
    NOK shareholders are lov'in it! 45% pop aint a bad way to start the week
    3 Sep 2013, 08:57 AM Reply Like
  • Ajayyy
    , contributor
    Comments (325) | Send Message
     
    I think people are overreacting. Msft got a good deal and Nokia is just beginning to pick up some steam. Unless they majorly screw it up, I think this is good news. Makes Google's deal for motorola look overpriced.
    3 Sep 2013, 08:57 AM Reply Like
  • gwynfryn
    , contributor
    Comments (6458) | Send Message
     
    I generally agree, Aj, but there are some confusing aspects to this (like Nokia retaining the brand name, and the question of what they'll do with the Asha line) which could well have repercussions, once the smoke clears...
    3 Sep 2013, 09:37 AM Reply Like
  • StayCool
    , contributor
    Comments (196) | Send Message
     
    I'm with Ajayy!! This is way too much of an overreaction.
    3 Sep 2013, 09:00 AM Reply Like
  • ted lujan
    , contributor
    Comments (1668) | Send Message
     
    The combination of this two companies may be the new General Electric of the future. Need less to say a great day for Nokia stock holders. Question to ask . Is Microsoft paying enough for Nokia and it's wealth of patents? I think that Microsoft is getting a great company on the cheap.
    Long Nokia and maybe a MSFT stock holder if it gets beat up over this deal.
    3 Sep 2013, 09:11 AM Reply Like
  • jcranf
    , contributor
    Comment (1) | Send Message
     
    pocket change for msft
    3 Sep 2013, 09:18 AM Reply Like
  • investingInvestor
    , contributor
    Comments (2459) | Send Message
     
    Gobble, gobble, gobble, gobble, ...

     

    Desperate times call for desperate measures.

     

    Gobble, gobble, gobble, gobble, ...

     

    Microsoft partners, you are sooooo screwed!

     

    Gobble, gobble, gobble, gobble, ...

     

    Yahoo and Dell have targets painted on their backs.
    3 Sep 2013, 09:26 AM Reply Like
  • jammerculture
    , contributor
    Comments (402) | Send Message
     
    *happy dance*
    3 Sep 2013, 09:32 AM Reply Like
  • slcUTAH
    , contributor
    Comments (542) | Send Message
     
    Happy dance.... happy dance.... I like to do the HAPPY DANCE.

     

    -Cheers.
    3 Sep 2013, 10:30 AM Reply Like
  • Momintn
    , contributor
    Comments (6053) | Send Message
     
    It's easier to get what you want when you own the hardware company. Kudos to MSFT.
    3 Sep 2013, 10:01 AM Reply Like
  • KCN
    , contributor
    Comments (385) | Send Message
     
    MSFT is becoming a vertically integrated company, similar to Apple but much bigger foot print, if they are lucky. Otherwise, we will have fragmented industry which will coalesce into something... and in the process, some will disappear.

     

    MSFT's challenge is to create an ecology without ads as the primary source of revenue.
    3 Sep 2013, 10:07 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    Amazing deal, but after they announced they were in negotiations last time, didn't it seem inevitable? Wasn't this obvious? And Elop has done such a great job turning Nokia around and has moved the company forward I still think he will be CEO.
    3 Sep 2013, 10:15 AM Reply Like
  • sourdo
    , contributor
    Comments (336) | Send Message
     
    Take the money and run.... I'm out till things settle down. 1st rule of investing, don't fall in love with your stocks.....

     

    sourdo
    3 Sep 2013, 10:26 AM Reply Like
  • romilar
    , contributor
    Comments (777) | Send Message
     
    At least 9 articles (so far) I have read,all de-crying - tears and fears - woes and no's - all based on perceived hindsight mistakes being the forbearer of future performance.

     

    How did MSFT ever get where they are today?Their div. yield is extraordinary in their sector - their tenacity is (imho) beyond reproach - their balance sheet is the envy of any company on the planet and they are among a very few on the entire exchange with a AAA credit rate.

     

    With respect to authors and all readers,someones assessment of what constitutes a successful business plan,is a bit skewed if not "short sighted" - I don't think the problem is with MSFT.....Rom
    3 Sep 2013, 10:34 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    $MSFT is making deals like $DIS, if you want guidance on how to make acquisitions, compare them with Disney and you can't go wrong. $NOK is like acquiring Marvel.

     

    Marvel comics was on the ropes, it was hemorrhaging money and Disney scooped them up for cheap and got billions in returns for their trouble.
    3 Sep 2013, 10:40 AM Reply Like
  • june1234
    , contributor
    Comments (4341) | Send Message
     
    Doesn't make a whole lot of sense to pay all that cash for Nokia when you already have exclusive software distribution rights with them. Googles still sucking wind on their Motorola deal maybe MS didn't want to be left out
    3 Sep 2013, 10:41 AM Reply Like
  • Alan1967
    , contributor
    Comments (241) | Send Message
     
    Despite the market's negative reaction, I think this is a good move for MSFT. It will allows them to more tightly integrate hardware and software like Apple, and perhaps they can put "foursquare"and "skype" software into the mix also. HOWEVER, $MSFT still needs to fix Windows 8.

     

    Getting ride of Ballmer was also a great move. I don't own any $MSFT stock, but now that Ballmer is gone I will consider it. I do like the "foursquare" and "nokia" moves by this company however.
    3 Sep 2013, 10:53 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    Bought shares today, people are discounting the $7B they are laying out for the acquisition, it revalues the company and many are seeing the big changes at Microsoft as messing with their portfolio status quo 4% per quarter income. So its just a temporary shake out.
    3 Sep 2013, 12:57 PM Reply Like
  • henhill69
    , contributor
    Comments (27) | Send Message
     
    Nokia Corp To Sell Devices & Services Business To Microsoft (Transcript) @ http://stks.co/jjQk
    3 Sep 2013, 11:13 AM Reply Like
  • russellm454
    , contributor
    Comments (128) | Send Message
     
    Anticipate the announcement soon that Elop is MSFT's new CEO. Ballmer see ya later.
    3 Sep 2013, 12:35 PM Reply Like
  • seymour2
    , contributor
    Comments (151) | Send Message
     
    The market spoke on the deal between Microsoft and Nokia today. Mr. Market was dead right.
    3 Sep 2013, 07:08 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    Right about what?
    3 Sep 2013, 07:11 PM Reply Like
  • seymour2
    , contributor
    Comments (151) | Send Message
     
    The market speaks again today : good deal for nokia, nothing in it for Microsoft. Microsoft picked the wrong horse to ride.
    4 Sep 2013, 03:29 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (18325) | Send Message
     
    Microsoft can't get on a horse in the first place.
    4 Sep 2013, 04:17 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4738) | Send Message
     
    it took apple 25 years to make a hit product, but MS is dead because its been less than 1 year.
    4 Sep 2013, 05:08 PM Reply Like
  • Andreas Hopf
    , contributor
    Comments (18325) | Send Message
     
    It took Apple from 1st April 1976 until 16th April 1977 to create their first hit product, the Apple II that from 1979 ran Dan Bricklin's VisiCalc, the first easy to use spreadsheet.

     

    Microsoft tries to get on the mobile horse since October 2010, when Terry Myerson and Larry Lieberman launched WP with great fanfare and promises to take consumers seriously. Three years of trying to get at least one foot in a stirrup.

     

    Besides, who said Microsoft is dead? This evening, it was still incorporated, trading at NASDAQ and its websites were up.
    4 Sep 2013, 05:43 PM Reply Like
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