Sep. 4, 2013, 4:10 PM
- Sources tell the WSJ BlackBerry (BBRY +5.9%) is " aiming to run a fast auction process that could be wrapped up by November." The report led shares to spike just before the close.
- Meanwhile, sources tell Bloomberg Microsoft (MSFT -2.2%) is "keeping an eye" on BlackBerry in the wake of the Nokia deal. Given Microsoft's commitment to Windows Phone, any interest in BlackBerry from the software giant could be related to the company's BES/network operations center assets rather than its hardware ops.
- The reports come as analysts continue to cut estimates. BlueFin Research says its checks indicate there have been major BB10 production cuts, and that BlackBerry has "amassed significant component and finished goods internal inventories, while many carriers and retailers are not restocking."
Sep. 3, 2013, 1:08 PM
- 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
Sep. 3, 2013, 8:11 AM
- 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.
Sep. 3, 2013, 4:47 AM
- Nokia (NOK) shares jump 37% in Helsinki following news that it's selling its mobile phone unit to Microsoft (MSFT) as part of a deal worth $7.17B.
- SA author Charles Fox reckons a major motive behind the transaction is that Nokia CEO Stephen Elop is now a dead certainty to replace Steve Ballmer as Microsoft boss.
- Shorn of a big loss maker and sitting on a nice cash mountain, the future seems bright for Nokia, although its potential could now be limited.
- Some might think that Microsoft is overpaying for a business "many investors and analysts wrote off as dead," but Fox thinks $5B "seems like chump change for a...division that once ruled the phone market" and could come back.
- Jacob Steinberg echoes these sentiments. "Nokia's phone business deserves a much better price than $5B considering how it generated $20.38B in revenues last year," says Steinberg.
Sep. 3, 2013, 12:51 AM
- Nokia (NOK) had a market cap of $14.5B as of Friday's close. Thus, unless investors think Nokia's assets outside of Devices & Services (they include $3B+ in net cash and an IP portfolio that's now more valuable) are worth $7.3B or less, shares will trade higher on Tuesday.
- Investors are likely to now look much more favorably on Nokia's financial health, both due to the Microsoft (MSFT) cash infusion and the fact the company is shedding a business it has been struggling to turn a profit on (and which also has significant liabilities). Look for some of the ratings agencies who have downgraded Nokia in recent years to issue upgrades going forward.
- Microsoft is both making good on its promise to evolve into a "devices & services" company, and taking an enormous gamble on increasing its consumer exposure at a time when enterprise-related sales have come to account for the lion's share of its op. profit.
- Nokia's Devices & Services unit posted a €703M op. loss (non-IFRS) in 2012, and a €32M op. loss in Q2. And while its Lumia sales rose to $1.16B in Q2 on the back of 7.4M units, feature phone sales fell 39% Y/Y to $1.41B thanks to soaring demand for cheap Android phones. Will Microsoft attempt to unload Nokia's feature phone ops, and if so, what kind of deal will it get?
- Also of concern: 1) Windows Phone, though faring well in some markets, only had a 3.7% smartphone unit share in Q2 (per IDC), and a large portion of its growth appears to be coming from feature phone converts. 2) WP licensees such as Samsung, LG, and Huawei, whose support for the OS has been limited relative to their support for Android, may not be thrilled that their WP models will be directly competing against Microsoft. As it is, the Lumia line accounts for an overwhelming share of the WP8 installed base.
- It's the end of an era: Nokia towered over the mobile phone industry for years, and had a 37% unit share in Q2 2007 (just before the iPhone's arrival).
- In what might amount to a goodwill gesture, Microsoft says it will invest $250M+ to build a Finnish data center that will serve European Microsoft consumers.
- Nokia CC at 4AM ET. Microsoft CC at 8:45AM ET.
- Previous: Microsoft buying Nokia's Devices & Services unit
Sep. 2, 2013, 11:51 PM
- Microsoft (MSFT) is paying €3.79B for Nokia's (NOK) Devices & Services ops, and €1.65B to obtain a 10-year non-exclusive license to Nokia's patents. The deal is expected to close in Q1 2014.
- 32K Nokia workers will be joining Microsoft. Stephen Elop and other senior Nokia execs (Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber) are expected to be among them. Elop has already been viewed by many as a top candidate to replace Steve Ballmer as Microsoft's CEO.
- Elop is resigning as Nokia's CEO, and from the company's board, to avoid signs of conflicts of interest. He's now head of Devices & Services. Chairman Risto Siilasmaa has been named interim CEO.
- Microsoft is also licensing Nokia's Here mapping platform, and providing Nokia with €1.5B in new financing. Nokia will now focus its efforts on NSN (telecom equipment), Here, and IP licensing; with no phones to obtain licenses for, Nokia now has more leverage in patent negotiations.
- Nokia will "maintain and own" the Nokia brand. Microsoft has obtained a license to use the Nokia brand with Series 30 and Series 40 phones, but apparently not Lumia phones (which presumably will be Microsoft-branded). Nokia won't be able to use its brand "on Nokia's own mobile devices" until the end of 2015.
- Nokia will hold a shareholder's meeting on Nov. 19 to vote on the sale. The company expects the deal to be "significantly accretive to earnings." The deal has a $750M termination fee.
- PRs: Microsoft, Nokia
- Previous: Nokia, Microsoft held advanced talks about phone unit sale
Jul. 8, 2013, 10:50 AMMicrosoft (MSFT +0.6%) has bought partner Blue Horseshoe's transportation and warehousing software products, and plans to integrate them with the supply-chain management software found in its Dynamics AX ERP software line. Microsoft has made a string of acquisitions (I, II) to bolster its Dynamics business app lineup, which aims to give SMBs who don't need SAP and Oracle's top-of-the-line solutions relatively cheap alternatives. Dynamics posted double-digit Y/Y sales growth in the March quarter. | Comment!
Jun. 19, 2013, 4:14 PMNokia (NOK) +2.6% AH after the WSJ reports Microsoft (MSFT) held advanced talks to buy Nokia's phone business, and was "close to an oral agreement" at one point, but adds discussions broke down in part due to price and concerns about Nokia's competitive positioning. One source says the talks "took place as recently as this month, but aren't likely to be revived." | 51 Comments
Jun. 12, 2013, 4:16 PMMicrosoft (MSFT) isn't interested in Nook Media's (BKS -6.1%) digital assets, sources tell dealReporter. The report led Barnes & Noble shares to dive over the final 15 minutes of trading. TechCrunch reported of Microsoft's interest in Nook Media last month, but a source later told Insider Monkey Microsoft "has no intention" of making a deal. | Comment!
May 13, 2013, 1:52 PM"This deal was nothing more than a rumor ... [Microsoft] has no intention of acquiring the NOOK unit. NOOK is closely integrated with Android ... The acquisition is not happening in the foreseeable future as Microsoft Corporation is assessing its options at this time." Thus speaks a Microsoft (MSFT) source to Insider Monkey, strongly refuting a TechCrunch report about an offer to buy Nook Media's digital assets for $1B. Barnes & Noble (BKS -14.1%) shares have plunged, but for now are still up 13% from where they stood prior to the report. | 3 Comments
May 8, 2013, 10:52 PMMicrosoft (MSFT) is offering $1B for Nook Media's (BKS) e-reader, tablet, and e-book ops (but not its college bookstore arm), TechCrunch reports. If true, the valuation assigned to NM is well below the $1.7B given when Microsoft bought a 17.6% stake (diluted to 16.8% by Pearson's investment) in April '12. Documents indicate NM (exc. the college ops) is expected to post FY13 (ended in April) revenue of $1.09B (-10% Y/Y) and an EBITDA loss of $360M, plans to discontinue its tablet line (makes sense, given market share trends), and will focus on content sales. Is such a business worth $1B? Regardless, Barnes & Noble ($1.06B market cap) should see a pop on the report. (FY13 warning) (FQ3 results) | 4 Comments
Apr. 8, 2013, 1:57 PMThe price tag for Ericsson's (ERIC +1.1%) purchase of Microsoft's (MSFT -0.6%) Mediaroom IPTV unit is in between the $99M Ericsson paid for network management software firm Optimi and the $234M it paid for a majority stake in the LG Nortel JV, says a company exec. Analyst Alexander Peterc points out Mediaroom complements the video assets Ericsson acquired from Tandberg. Meanwhile, chairman Leaf Johansson is striking a positive tone about 2013 mobile infrastructure demand. "I am a little more optimistic on the U.S ... Perhaps Europe too has stabilized." | Comment!
Apr. 8, 2013, 9:44 AMMicrosoft (MSFT) unloads its Mediaroom IPTV infrastructure platform business to Ericsson (ERIC) for an undisclosed sum; Bloomberg reported about this deal a couple weeks ago. Ericsson claims the deal will give it a 25%+ share of the IPTV/multi-screen infrastructure market, and points out the global IPTV subscriber base is expected to grow to 105M in 2015 from 76M in 2013. In a blog post, Microsoft says it will now dedicate all its TV resources to the Xbox. The remarks come as The Verge reports the next-gen Xbox will be revealed at a May 21 event. | Comment!
Mar. 5, 2013, 9:33 AMMicrosoft (MSFT) acquires MetricsHub, a developer of tools that automate cloud management with the goal of optimizing performance. Naturally, MetricsHub will be integrated with Microsoft's Azure cloud infrastructure/app development platform. News of the purchase comes shortly after Microsoft updated Azure's enterprise security/management tools - the company has long tried to differentiate Azure through its support for hybrid clouds and integration with Microsoft's enterprise software ecosystem. (Red Hat/ManageIQ) (VMware/DynamicOps) | 1 Comment
Feb. 28, 2013, 4:36 PMFacebook (FB) finally makes its long-rumored purchase of Microsoft's (MSFT) Atlas ad-serving/tracking business official. Terms haven't been disclosed, but past reports have suggested the price is below $100M. The purchase strengthens Facebook's efforts to create a platform for serving targeted display ads that can rival Google's (GOOG) DoubleClick. | Comment!
Feb. 5, 2013, 9:38 AMMore on Dell's LBO: Microsoft (MSFT) will provide a $2B loan rather than an equity investment, as had been reported. Michael Dell will remain chairman/CEO. The deal is expected to close before the end of the July quarter. Dell will have a 45-day "go-shop" period to solicit alternate bids; a $180M termination fee applies. Look for disgruntled shareholders to challenge the deal, particularly given Michael Dell's conflict of interest. But finding a higher bid could be easier said than done. DELL halted. (PR) | 5 Comments
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