Microsoft Does Inevitable, Buys Nokia Smartphone Unit, Patents For $7.2 Billion

[ReadWrite]

Nokia, the once-"burning platform" mobile devices company, is now seen to be a looked-upon savior for Microsoft. Late Labor Day evening, Microsoft announced it would be acquiring the handset and services business of Nokia, as well as licensing Nokia's substantial patent portfolio.

The all-cash deal shakes out to be €3.79 billion for Nokia's handset business itself, and an additional €1.65 billion to license the patents, a total of €5.44 billion, which currently equates to $7.17 billion on the exchanges.  Nokia will be keeping its networking, mapping and location businesses and technologies. The deal is expected to close in the first quarter of 2014.

Under the deal, Microsoft will also see the return of its prodigal son: former Microsoft executive turned Nokia CEO Stephen Elop will be rejoining the Microsoft team, along with 32,000 Nokia employees.

See also What Microsoft Did And Didn't Buy With Its Nokia Acquisition

The timing of this announcement just sets up one more careening move on the Microsoft roller coaster this week, coming very soon after the announced retirement of Microsoft CEO Steve Ballmer and the rise in power of the ValueAct Capital investment group with the Microsoft board in order to avoid a proxy fight.

See also Ballmer Announces Retirement As Microsoft CEO and ValueAct To Microsoft: Start Paying Attention To Bottom Line

 But while the timing of the Nokia acquisition may have been a surprise, it is also being seen as something that was perhaps a long time coming, ever since that fateful day in February 2011 Nokia's Elop told his employees in early 2011 that Nokia's platform was burning and that something had to change. Two days later, Nokia announced a strategic partnership with Microsoft that would ultimately see Nokia dropping work on Android and MeeGo phones in order to pin their smartphone hopes on the Windows Phone platform.

But as many analysts and observers have stated time and again since the beginning of the Microsoft/Nokia partnership, the expected success has yet to materialize, with Windows Phone marketshare in the U.S. somewhere around 3%, according to comScore.

See also Nokia After the Burning Platform

 The return of Elop to Microsoft's team sets up speculation that Elop could be a possible successor to Ballmer as Microsoft CEO. It is not known what Elop's immediate official role will be back at Microsoft.

See also Microsoft's Best Bet For Next CEO Currently Runs Another Giant Company

 Microsoft has sought in recent months to re-make itself as a "devices and services" company, and picking up Nokia for $7.17 billion is one way to accomplish that goal. But Nokia has failed to make a market impact since Elop started leading in 2010, so how these two companies expect to succeed together when separately they were struggling, even as partners, is anyone's guess.

Image courtesy of Microsoft.

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