Microsoft Corp. now has the big fish in its hands. The software behemoth is now spending 5.44 billion Euros ($7.2 billion) to acquire Nokia Oyj’s handset unit so it can compete in the smatphone battleground with rivals like Apple Inc. and Google.
Nokia’s devices and services unit, which gives almost half of the company’s last year revenue, consist of some 32,000 employees.So what about these employees. Nokia source disclosed that these employees will be shifted to Microsoft. Nokia CEO Stephen Elop, 49, will also transfer his services to Microsoft after three-year supervision at Nokia. The move give rise to certain rumors that Elop might be the next CEO that Microsoft needs.
Microsoft is planning to excel in hardware as fluctuating computer sales in making its revenues fall. Nokia shares rose by 48 percent in Helsinki. If both companies combine their business, it merely accounts for the 4 percent of the smartphone market, making them far behind Apple and Google.
Nokia, based in Espoo, Finland, slipped by the losses of up to 5 billion euros for the past nine quarters by the dominance of Apple and Google’s Android platform in the smartphone industry.
The shares were high with 34 percent to 3.97 euros in Helsinki, making Nokia’s value at 14.9 billion euros. The Redmond, Washington-based Microsoft shares fell 4.6 percent to $31.88 at the shut down in New York, losing some $12.6 billion in its market value. The company is now valued at $265.6 billion.
The latest agreement says Microsoft will give 3.79 billion euros for Nokia’s devices unit and another 1.65 billion euros for patents division. This high-cost transaction will get complete in the first quarter of the next year. JPMorgan Chase & Co. has been hired by Nokia, while Goldman Sachs Group Inc. advises Microsoft on the transaction.
Nokia is hopeful of getting 3.2 billion euros, with the significant sale earnings. It also eyes on returning its debt. it is worth of mentioning that Nokia’s grading has been ranked junk by all three major rating companies, to an investment grade.