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Nokia to sell handset business to Microsoft for $7.2 billion

Two years after hitching its fate to Microsoft's Windows Phone software, Nokia collapsed into the arms of the U.S. software giant on Tuesday, agreeing to sell its main handset business for 5.44 billion euros ($7.2 billion). Nokia, which will continue to make networking equipment and hold patents, was once the world's dominant handset maker but was long since overtaken by Apple and Samsung in the highly competitive market for more powerful smartphones. Nokia's Canadian boss Stephen Elop, who ran Microsoft's business software division before jumping to Nokia in 2010, will return to the U.S. firm as head of its mobile devices business - a Trojan horse, according to disgruntled Finnish media. He is being discussed as a possible replacement for Microsoft's retiring CEO Steve Ballmer, who is trying to remake the U.S. firm into a gadget and services company like Apple before he departs, though it has fallen short so far in its attempts to compete in mobile devices. "It's very clear to me that rationally this is the right step going forward," Elop told reporters, though he added he also felt "a great deal of sadness" over the outcome. In three years under Elop, Nokia saw its market share collapse and its share price shrivel. In 2011, after writing a memo that said Nokia was falling behind and lacked the in-house technology to catch up, Elop made the controversial decision to use his former firm Microsoft's Windows Phone for smartphones, rather than Nokia's own software or Google's ubiquitous Android operating system. Nokia, which had a 40 percent share of the handset market in 2007, now has a mere 15 percent share, with an even smaller 3 percent in smartphones. Shares in Nokia surged 39 percent to 4.10 euros on Tuesday as investors who had borrowed and sold the stock to bet on further price falls rushed to buy back to limit their losses. They are still only a fraction of their 2000 peak of 65 euros. After today's gains the whole company is worth about 15 billion euros, a far cry from its glory days, when it peaked at over 200 billion euros. Microsoft shares in Frankfurt were down about 2.2 percent. (More at link)

http%3A//www.reuters.com/article/2013/09/03/us-microsoft-nokia-idUSBRE98202V20130903


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