Microsoft Corp said it would buy Nokia Oyj’s phone business and license its patents for 5.44 billion euros (US$7.2 billion), making its boldest foray yet into mobile devices and bringing the Finnish company’s CEO, Stephen Elop, back into the fold.
Elop, a former Microsoft executive, will return as Microsoft’s board ponders a successor to current CEO Steve Ballmer, who will depart sometime in the next 12 months after initiating a reorganization intended to transform the software company into a devices and services group in the mold of Apple Inc.
The sale of Nokia’s phone business marks the exit of a 150-year-old company that once dominated the global cellphone market and remains one of Europe’s premier technology brands, even though Apple and Samsung Electronics’ ascendancy all but reduced it to irrelevancy in Asia and North America in recent years.
“For a lot of us Finns, including myself, Nokia phones are part of what we grew up with. Many first reactions to the deal will be emotional,” Finnish Minister for European Affairs and Foreign Trade Alexander Stubb said on his Twitter account.
Nokia — reduced to its networks business, navigation offerings and patent portfolio after the sale — is still the world’s No. 2 mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.
Sales of Nokia’s Lumia series have helped the market share of Windows Phones in the global smartphone market climb to 3.3 percent, according to consultancy Gartner, overtaking ailing BlackBerry Ltd for the first time this year. Still, Google Inc’s Android and Apple’s iOS system make up 90 percent of the market.
Canadian Elop, hired from Microsoft in 2010, has been cited among the frontrunners to take over from Ballmer, who has been criticized for missing the mobile revolution and only starting Microsoft’s foray into the market with the tepid-selling Surface tablet only last year.
Buying Nokia’s gadget business thrusts Microsoft deeper into the hotly contested market, despite some investors urging the company to stick to its core strengths of business software and services.
Activist fund manager ValueAct Capital Management, which has been offered a board seat, is among those concerned with Ballmer’s leadership and his attempts to plow headlong into the lower-margin, highly competitive mobile devices arena. The San Francisco-based fund, which manages about US$12 billion for clients, owns 0.8 percent of Microsoft’s shares.
Others applauded Ballmer’s aggressive gambit.
“Microsoft cannot walk away from smartphones and the hope that other vendors will support Windows Phone is fading fast. So buying Nokia comes at the right time,” Gartner analyst Carolina Milanesi said.
“In today’s market it is clear that a vertical integration is the way forward for a company to succeed. How else could Microsoft achieve this?” she said.
As part of Microsoft, Elop will head an expanded Devices unit. Julie Larson-Green, who in July was promoted to head a new Devices and Studios business in Ballmer’s reorganization, will report to Elop when the deal is closed.
Analysts say Elop’s bold bet in 2011 to adopt Microsoft’s untested Windows Phone software has yet to pay off.
“It’s a bold step into the future — a win-win for employees, shareholders and consumers of both companies,” Ballmer said in a statement.
“Bringing these great teams together will accelerate Microsoft’s share and profits in phones and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services,” he said.
Nokia said in a statement it expected that, apart from Elop, senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen and Chris Weber would transfer to Microsoft when the deal is concluded. It did not say what roles they would take there.
Nokia board chairman Risto Siilasmaa would take over CEO duties, while the Finnish firm looked for a new CEO, it said.
The deal is expected to close in the first quarter of next year, subject to approval by Nokia shareholders and regulators.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is