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Microsoft likely to pay $1 bn to Nokia for developing handsets

|Includes: Microsoft Corporation (MSFT), NOK

Microsoft Corp. (NASDAQ: MSFT) will pay Nokia Corp. (NYSE: NOK) more than $1 billion to develop and promote phones based on the Windows Phone 7 operating system, according to a report from Bloomberg.

In turn, Nokia will pay Microsoft a licensing fee for each copy of Windows used in its smartphones, which the Finnish company will offset by cutting back on the development of its own operating system.

Nokia Shares have dropped 26 percent since NOK-MSFT deal was announced on February 11.