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Microsoft outlines plans for Nokia unit, skepticism abounds

  • A Steve Ballmer e-mail and a company presentation go over Microsoft's (MSFT -6%) plans for Nokia's (NOK +31.3%) phone unit.
  • Stephen Elop, now more than ever viewed as a possible Ballmer replacement, will head an "expanded Devices team" that will include "all of [Microsoft's] current Devices and Studios work and most of the teams coming over from Nokia.
  • Julie Larson-Green, who was recently put in charge of Devices & Studios' engineering and content work, will join Elop's team once the deal closes.
  • Key Nokia engineering/design execs will report to Elop. But Nokia's sales team, led by Chris Weber, will ultimately report to COO Kevin Turner. Also, "all global marketing" will be run by Microsoft's Tami Reller and Mark Penn. There are "no major plans" to move Nokia teams to different geographies.
  • Microsoft predicts the purchase will hurt FY14 EPS by $0.08, be neutral to FY15 EPS, and accretive to FY16 EPS by $0.08. Much, of course, depends on how future hardware launches are received.
  • Microsoft is acquiring 8.5K Nokia design patents. Nokia's 30K utility patents/applications are being licensed. Elop insists Microsoft isn't abandoning Nokia's declining feature phone ops, calling them "an on-ramp to Windows Phone."
  • Like others on the Street, Deutsche is unconvinced about the deal's merits. "We do not see this deal offering anything incremental to MSFT that it did not have as part of its partnership with NOK."
  • Ben Thompson: "Today no one cares about Nokia’s industrial design, distribution, or supply chain, because their devices lack an app ecosystem, the price of entry into smartphones ... I theorize that Nokia was either going to switch to Android or was on the verge of going bankrupt."
  • GigaOm's Kevin C. Tofel: "Let’s get real: Nobody will license Windows Phone or Windows RT now."
  • Horace Dediu isn't quite as critical, arguing Nokia's mobile hardware "processes" and "priorities" could make the deal worthwhile even if its "resources" don't.
  • More on Microsoft/Nokia
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Comments (12)
  • jammerculture
    , contributor
    Comments (402) | Send Message
     
    Wall street guys are going to hate this as they were already lining up to raid Microsoft of the cash that will be spent on this deal. There will be tons of bad hype from the street. However, this is a great thing and benefits the Lumia line of Windows Phone and any subsequent hardware ventures undertaken by Microsoft.
    3 Sep 2013, 01:26 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4377) | Send Message
     
    Yes, why do we think an activist got a board seat, to push them to pay out more cash.
    3 Sep 2013, 06:23 PM Reply Like
  • Silicon Valley Insights
    , contributor
    Comments (81) | Send Message
     
    Wall Street M&A groups will love this deal and the VZ acquisition too as the fees will be huge.
    3 Sep 2013, 02:06 PM Reply Like
  • Earl Thomas
    , contributor
    Comments (177) | Send Message
     
    Microsoft is the most hated on tech company...that means you might want to buy it.
    3 Sep 2013, 02:48 PM Reply Like
  • Bouchart
    , contributor
    Comments (805) | Send Message
     
    Nokia, a declining and increasingly irrelevant brand, is bought out by a company that has recently botched some of it's consumer electronics products, such as the Surface tablet and all the bad press the Xbox One has received. Can't say I'm optimistic.
    3 Sep 2013, 04:31 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4377) | Send Message
     
    Analysts are idiots, they said you are irrelevant if don't move to the cloud, and the same if you're not in mobile. Now they claim that mobile is a horrible industry and are crazy for getting into it.
    3 Sep 2013, 06:25 PM Reply Like
  • deercreekvols
    , contributor
    Comments (6856) | Send Message
     
    Goldman Sachs had a sell rating on NOK and bought over 60M shares some time back...what was good for them was not good for their clients, so it seems.
    3 Sep 2013, 06:59 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4377) | Send Message
     
    They bet against clients all the time
    3 Sep 2013, 07:01 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11568) | Send Message
     
    Yay, Ballmer's ambitions abound yet his skill to make any of them happened are 0. His lack of skill is only rivaled by his ability to increase headcount and expenses. Ballmer, why don't you fix your software and by the way... aren't you leaving? Stop wasting the company's resources and get out.

     

    Nokia is a terrible buy for a gamete of reasons including alienating your OEM partners, utter failure at hardware sales, slow development, and the fact when things go wrong good luck at firing Nokia employees without major lawsuits and people hating your company even more.

     

    On Nokia's side, they clearly paid too much. Nokia itself is a miserable failure at innovation the last decade, but great at vaporware and marketing. Elop is far from a visionary. And Nokia relied on Microsoft because they were inept, why would you then ask them to run your company?
    3 Sep 2013, 09:47 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (4377) | Send Message
     
    Wow now that is a giant salvo of hate on your part! Why so negative? This is a party, pop open one and join the fun, are you mad because you didn't buy Nokia shares as one of the most obvious trades in history?
    3 Sep 2013, 10:45 PM Reply Like
  • cereal
    , contributor
    Comments (1106) | Send Message
     
    What OEM partners?

     

    Last I recall they either discontinued phones (HTC 8X), or release second grade phones a year after they release on Google (Samsung, HTC). Good riddance.

     

    But I also think the buyout of Nokia's division without the brand was a bad move. Nokia had goodwill and favorable consumer sentiment.

     

    On the other hand Microsoft has to contend with haters who despise having to pay for software and who would love to get revenge for the demise of Netscape. Tough times ahead.
    4 Sep 2013, 01:30 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4377) | Send Message
     
    They've licensed the Nokia brand name, so I don't see it being called a Microsoft phone anytime soon.
    4 Sep 2013, 09:19 AM Reply Like
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