8 ms·

Microsoft to acquire Nokia

395 points by SwaroopH 13y ago

richardjordan 13y ago
I think this has been expected since the Nokia Windows Phone bet. I suspect that this is not unrelated to the Ballmer departure. I'm not sure it does either company much good. If anything it looks to me like a panic move of two companies who while from te outside they seem huge and successful to many are actually seeing the writing on the wal and have no real plan for the future. This won't make Microsoft competitive with Apple where it wants to be despite the hopes of Redmond.
deleted 13y ago
[deleted]
- eonil 13y ago
  How's on Motorola?
  - twodayslate 13y ago
    or HTC?
- wtallis 13y ago
  Samsung is several times larger than Google. Their phone division probably isn't, but it makes no business sense to buy part of a vertically-integrated market leader.
- taspeotis 13y ago
  Well from a bit of Googling it would seem that Samsung has a market capitalisation of ~USD$120B vs. Nokia's ~USD$14B. I'm unsure of what % of Samsung is mobile devices, but one would assume Google would have to throw a lot more money at Samsung to buy their devices division than MS is spending to buy Nokia (according to their press release: USD$7.17B)
  - deleted 13y ago
    [deleted]
  - sanxiyn 13y ago
    > I'm unsure of what % of Samsung is mobile devices Samsung Electronics is a public company, and this information is public. For Q2 2013, mobile devices accounted for 60% of sales and 66% of operating profit. http://www.samsung.com/us/aboutsamsung/ir/ireventpresentations/earningsrelease/downloads/2012/20130726_conference_eng.pdf http://www.samsung.com/us/aboutsamsung/ir/ireventpresentatio...
- larrykubin 13y ago
  Samsung has a market cap of around 200 billion now. Google couldn't afford it.
- jacques_chester 13y ago
  Samsung has ~5x the revenues, ~5x the assets and ~2x the profit of Google. Unless Google wants to leverage itself for the next 10 years to acquire a company that does engineering services, shipbuilding, heavy industrial manufacture, life insurance, theme parks, aerospace and oh I guess some mobile devices here and there, I don't see this happening. Edit: for the interest of passers-by, the deleted comment proposed that Google might buy Samsung. It was possibly a light-hearted remark, but luckily nitpicking folk like yours truly were here to save the thread from inaccuracy. :D
cicloid 13y ago
With the apparent growing trend on emerging markets of Windows Phones (the Lumia series produced by Nokia, and pushed by carriers on LATAM like Telcel/America Movil) This seems like a great move from MS, they have bought more runway. But come on, the move was telegraphed a couple of years ago.
IanChiles 13y ago
And now Microsoft has a hardware division. I can easily see most hardware vendors being ousted by the trio of Google/MS/Apple - all of whom now either make or have been making their own hardware to go along with their software. And so the walled garden grows...
- spullara 13y ago
  They already have several hardware products including Xbox, Kinnect, keyboards, mice, and the Surface.
  - IanChiles 13y ago
    But now they're in control of a hardware vendor - one in a position to allow them to close off WP8 to other OEMs, and potentially a future version of Windows.
  - kabdib 13y ago
    With the exception of the folks doing keyboards (which they have been serially been screwing up for the last ten years) Microsoft has some very good hardware people. The Surface was a nice piece of kit, but way expensive (for unavoidable reasons, I hear) and running the wrong software (also for unavoidable reasons).
    - cbhl 13y ago
      I remember their developer evangelists were running around showing off some $3000 Samsung tablet PC prior to the Surface and Surface Pro being released. People think the Surface is expensive because they compare it to the iPad or Nexus 7/10 product lines, but it seems like Windows RT is closer to a port of Windows 8 to ARM than anything else, which makes it seem odd that you'd think to run Windows Rt on a $200 tablet.
      - valleyer 13y ago
        I think (s)he was talking about what used to be called "Surface", which is now called "PixelSense".
wfunction 13y ago
I hope Ballmer and Gates have a dedicated CEO in mind now that Ballmer's leaving... very few people will be able to lead a company this large, and it will be quite a tragedy if Microsoft's reputation declines and takes down Nokia with it.
- magickastle 13y ago
  I heard a rumor that Paul Graham is being courted, but it is probably disinformation.
  - kabdib 13y ago
    Microsoft could do a lot worse :-)
  - nosefrog 13y ago
    I would be very surprised if either party was interested in PG being CEO of Microsoft.
  - untog 13y ago
    Haha good lord no. I doubt either party would be in any way interested.
anomaly_ 13y ago
I found this statement interesting - "Microsoft will draw upon its overseas cash resources to fund the transaction." I've seen it mentioned quite a few times that tech companies end up with massive overseas cash reserves they can't repatriate for tax reasons. Anyone with better knowledge of finance/tax want to chime in with whether this makes the deal even more attractive for MS?
- tanzam75 13y ago
  The corporate tax rate in the United States is 35%. The corporate tax rate in Ireland is 12.5%. (This is why multinationals like to incorporate their European subsidiaries in Ireland.) If Microsoft moved money in the United States, it would pay the difference in taxes -- namely, 22.5%. But if Microsoft spent the money outside the United States, then it would not pay this difference. Incidentally, Finland will be reducing its corporate tax rate next year, from 24.5% to 20%.
- sjwright 13y ago
  A summary of the tax arrangements used by some large American multinationals, including Microsoft, Google, Facebook, Apple, Oracle and Adobe: http://en.wikipedia.org/wiki/Double_Irish_arrangement http://en.wikipedia.org/wiki/Double_Irish_arrangement As I understand it, these international profits remain in the tax-haven-resident Irish company, and cannot be repatriated to the US parent without incurring an undesirable taxation event. It's highly likely that Finland-based Nokia is a fiscally efficient purchase for Microsoft. Both Finland and Ireland are EU countries, are in the Eurozone, and have a customs union. (It would be interesting to compare this to Google's purchase of Motorola Mobility, which was an American company.)
Steko 13y ago
Speaking of handset makers that missed the revolution, I wonder who will pick up RIM as they circle the drain. Microsoft is probably the favorite right?
- tanzam75 13y ago
  Now that Microsoft is buying Nokia, it seems unlikely that Microsoft will buy Blackberry. Unless it's a firesale for the patents. Note: RIM changed its name to Blackberry Ltd, with a stock ticker of BBRY.
  - bodyfour 13y ago
    I'd say Blackberry is the big loser in this deal, since it probably takes one of their more plausible options off the table.
    - Steko 13y ago
      RIM's two selling points still seem as relevant as they did last week for MS: patents and the loyal but shrinking customer base.
      - tanzam75 13y ago
        How loyal would the customer base be if Blackberry switched to Windows Phone? Would they be any more loyal than Symbian users when Nokia did the transition? This is why I mention only the patents. Those are clearly valuable. The customer base is debatable.
        Steko 13y ago
        If Blackberry goes into liquidation the customer base breaks more or less like the market and WP get's .1% market share. Otherwise if they buy BB and can hang onto half of those customers. That would almost double WP's market share. Those customers are worth more to also ran WP than anyone else.
      - 13y ago
kyro 13y ago
Great move by Microsoft. This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's. They're getting industry veterans with great design talent. They're getting a Lumia product that has the best build quality of any non-Apple smart phone. They're acquiring proven channels to access global markets. Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings. I'm not a fan of their mobile OS, but I am a huge fan of Nokia's latest smartphones, and if Nokia design's talent can figure out how to introduce a better UI, I'd seriously consider getting The Windows Phone as my next smartphone.
- Shamanmuni 13y ago
  But they were together already. This past time Nokia only developed Windows phones and Microsoft paid for the marketing of the Lumia. Nokia had Stephen Elop as CEO, for crying out loud. We already knew Nokia was a part of Microsoft. This is not a move, just a formality; the low price gives you another hint. If the partnership Microsoft-Nokia could have changed their positions in the mobile sector, it would have happened years ago. Nothing will change as a result of this.
  - kyro 13y ago
    It's more than that. Microsoft is acquiring the Lumia brand. This gives them the ability to bundle both hardware and software to create one simple, cohesive experience. They will no longer be pushing the Nokia Lumia with Windows Phone 8, but The Microsoft Phone. And they can now brag about how they are the smartphone with the best camera. From a marketing perspective, this makes lots of sense. Lots of that is speculation on what I hope Microsoft does with this, namely adopting Apple's marketing simplicity and control of the user experience.
    - count 13y ago
      I wonder if such bundling will be an issue with their existing anti-trust issues?
mindprince 13y ago
I found Microsoft's strategic rationale for this deal interesting: http://www.microsoft.com/en-us/news/download/press/2013/StrategicRationale.pdf http://www.microsoft.com/en-us/news/download/press/2013/Stra...
cpeterso 13y ago
The press release says Microsoft will acquire Nokia’s Devices & Services business and license Nokia’s patents and mapping services. So what happens to the rest of Nokia?
- tanzam75 13y ago
  > So what happens to the rest of Nokia? Nokia keeps the other two divisions. Nokia is now primarily a telecoms infrastructure company, like Alcatel-Lucent. They're pretty closely matched. Alcatel-Lucent had €14.4 billion of revenues in 2012, while Nokia Siemens Networks took in €13.1 billion of revenues. There's also the mapping division, but that's just 10% of the new Nokia's revenues. I'm surprised Microsoft did not buy it, as Google and Apple both own their own maps. In fact, I wonder if the mapping division wasn't what scuttled the previous attempts to reach a deal.
  - tincholio 13y ago
    > Nokia Siemens Networks NSN is no longer Nokia Siemens Networks; it's Nokia Solutions and Networks now, and Siemens is no longer part of it.
    - tanzam75 13y ago
      The deal closed in August 2013. It would have been inaccurate to refer to it as Nokia Solutions and Networks when giving 2012 results.
- gph 13y ago
  "Its device business now gone, Nokia's plan is to focus on three core technologies: NSN (its network infrastructure) HERE (its maps and location-based services); and Advanced Technologies (a licensing and development arm)."[1] It'll still exist. Most of the top executives are moving to Microsoft as part of the deal though. I am curious if this deal required shareholder consent of any type. I'm sure the board had to approve. Still I don't know how I'd feel if I was holding onto a decent chunk of Nokia stock right now and I didn't get any say in selling out our core business. [1]http://www.theverge.com/2013/9/2/4688530/microsoft-buys-nokias-devices-and-services-unit-unites-windows-phone http://www.theverge.com/2013/9/2/4688530/microsoft-buys-noki...
general_failure 13y ago
So, is there any Nokia left after all this?
- tanzam75 13y ago
  > So, is there any Nokia left after all this? Yes, it leaves Nokia Siemens Networks and HERE Maps. Last quarter, NSN accounted for 49% of Nokia revenues, and 108% of operating profit. (Not a typo -- the phone division lost money.) HERE Maps is insignificant, but for some reason Nokia wanted to hang on to it. So, Nokia now has a slightly increased operating profit, plus an extra €5.4 billion from Microsoft. According to the press release, when you subtract out the purchase price for the "S" half of NSN, Nokia has €7.8 billion in net cash. For a company that closed yesterday at a market cap of €11 billion.
ChuckMcM 13y ago
Wow, I can't say I'm completely surprised but still. It is an amazing thing. It has to be pretty scary these days to be a phone maker.
test001only 13y ago
What would this mean for all the Nokia feature phones ? The latest Asha series was very good and selling pretty well at least in India. How would this figure in MS strategy? Are they going to ditch it? That would be sad, because Nokia still makes phones that can withstand rough use. On the other side would Nokia start manufacturing Laptop in future. I would really like Nokia design team to come up with a good Windows laptop!
- apike 13y ago
  One of Microsoft's documents about the acquisition calls out that it is getting the Asha brand and a 10-year license to the Nokia brand for feature phones, so I expect that line will stay for now.
  - abrowne 13y ago
    I wonder if the Asha design will go from Meego-like with Nokia squircles to a Metro-like square theme? I personally love my Asha 501, but wouldn't want a WP8-light version. Also, will they "upgrade" Nokia Xpress's (proxy browser) backend to use the IE engine in place of Gecko?
simula67 13y ago
Slightly off-topic : For hackers outside the USA/EU I think Microsoft succeeding can be a bad thing since Macs are really expensive here and Microsoft silently allowing piracy means that everyone uses Windows. I feel that ISVs better supporting Linux would be a nice thing and one of the important things to happen for that is for Windows to loose its monopoly ( second is of course some sort of agreement between all Linux distros around some standard ). I can't but feel that is to be a distant dream, since Microsoft seems to have infinite pockets and can buy their way out of any trouble for years to come.
yalogin 13y ago
Motorola and now Nokia, the last of the previous era big wigs have fallen. 13 years ago Lucent, Motorola, Ericsson, Sun, Nortel were huge. Now they are all gone. Even HP, Dell are no longer leading. That is a really short time span for a company to be on top of the world and disappear. Is this the expected life span of a tech company?
- foobarbazqux 13y ago
  13 years ago was the dot-com bubble. What about Microsoft, IBM, Apple, Intel, Oracle?
  - brokenparser 13y ago
    IBM doesn't count because that company is almost as old as the invention of the computer itself.
    - pilsetnieks 13y ago
      IBM is actually older than the computer, it was founded in 1911. (Unless you count Babbage's machine.)
      - brokenparser 13y ago
        That's almost exactly what I wanted to write until I read the definition of his analytical engine on Wikipedia. Although IBM says they formed through a merger of three companies in 1911, it's origins started in the 1880s and I count that as the true beginning of IBM. Note that in 1911 the company was called CTR and they kept that name until 1924, so either way I don't think 1911 accurately reflects the founding year of IBM.
- besquared 13y ago
  Specialized hardware was always kind of a stopgap. Even now you can see networking companies facing the double threat of virtualized networking in software. Software is eating the world as Andreessen famously stated. As to the life span of tech companies I think it will only get shorter. One thing I find interesting is that it's difficult for humans (including myself) to really internalize the overall effects of compounding interest. I read a comment the other day in which the author was joking about how they can't wait until 2023 when they get to look back and feel how they do now looking back at 2003. It doesn't always seem that the speed at which things are happening is increasing dramatically even if that's the case. The progress between 2003 until now will be completely overwhelmed just a few years from today.
josephscott 13y ago
I wonder if this played into Ballmer leaving. Odd to have a massive re-org and massive purchase, only to have the CEO turn around and leave right afterwards.
- nextw33k 13y ago
  The timing of this is completely laid out. It looks too perfect and these deals take time to arrange and agree, they are not done in a week.
annnnd 13y ago
Nokia, rest in peace - we will miss you. Your phones were legendary.
- berntb 13y ago
  Hear hear. A black T-shirt today. :-(
- harrytuttle 13y ago
  Erm, they still are and will be in the future. they bagged the guys who designed them as well.
  - nextw33k 13y ago
    You might be unfamiliar with what happens after a corporate merger. Usually there is a decision to remove duplication within the corporation. If you were Elop next year running MS in Redmond, who would you lay off? The people in your building or those in the opposite side of the world in Finland? Update: On a side note, manufacturing usually stays until the machines are no longer worth using. Then they shut the place down claiming inefficiencies and build a new factory somewhere else. They don't mention the lack of investment for 10 years of course.
    - gtirloni 13y ago
      On the software front, that already happened when Nokia decided to use WP8 and ditch their own software. On the hardware front, MS might actually enjoy having more hardware engineers to help with the Surface/Xbox stuff. HR, payroll, etc might be not that safe though.
- trailfox 13y ago
  Sad to see Nokia going the way of the dodo.
devx 13y ago
Seems like Elop stayed true to his nickname - of a trojan horse. He never really worked for Nokia. He's been working for Microsoft the whole time, just to sell it for this low price. How the hell are the shareholders okay with this? I'm shocked it sold for under $10 billion. Nokia's total valuation is about 15 billion, and you'd have to imagine they'd have to pay a 30 percent premium when buying it, so that's $20 billion for the whole. I assume the devices division was worth at least half of that. Didn't Nokia already sell the telecom part?
- auctiontheory 13y ago
  Presumably Nokia's management thought they were getting a good deal for the devices business, since its long-term value to Nokia seems to be approaching zero. Now if you ask: was Windows Mobile all a plot to blow up Nokia? That's an interesting question. I can't confirm that.
- tluyben2 13y ago
  That's what I thought when Elop went to Nokia and even in hindsight it seems to be the case. As a share holder, I definitely would ask questions. It seems hard to prove though; their market was falling anyway, but there are a lot of what ifs: like if they would've done Android, continued with their own OS but made it really open etc.
- trailfox 13y ago
  > Seems like Elop stayed true to his nickname - of a trojan horse. Wonder if it was intentional to run Nokia into the ground or just sheer incompetence?
  - discodave 13y ago
    Remember Hanlons razor...
- pasiaj 13y ago
  There is a running joke about the irony of the board chairman Siilasmaa of F-Secure letting in a Trojan Horse. http://fi.wikipedia.org/wiki/Risto_Siilasmaa http://fi.wikipedia.org/wiki/Risto_Siilasmaa
ximeng 13y ago
Annual cost synergies of 600MM within 18 months - sounds like they plan to kill 3000 jobs. http://www.microsoft.com/en-us/news/download/press/2013/StrategicRationale.pdf http://www.microsoft.com/en-us/news/download/press/2013/Stra... (page 21)
jcrei 13y ago
The old fat couple in the room had a dance and #microsoft just ran out of things to say, so in order to avoid an awkward moment (high end sales are abysmal) he proposed. #nokia looked around, didn't want to die alone, and like any scared middle aged woman, said yes.
simonh 13y ago
This is the ultimate indictment of Steve Ballmer's "I like our strategy, I like it a lot" statement. This is the final admission that their strategy of licensing a mobile OS to phone manufacturers, just as they licensed desktop Windows to PC makers, has completely failed. This must have been in the works for months, so now finally the other shoe has dropped and we know why he had to leave. There's no way he could save face over something like this. Just to be clear, the strategy itself wasn't the problem, just look at Android, the problem was that technically their product was technically deficient. They failed to execute the strategy effectively. What I have always wondered is whether this was simply due to hardware limitations of the day, or whether the old Windows Mobile was deliberately held back technically to prevent it competing with Desktop Windows. If the former then Microsoft just suffered from a form of first mover's disadvantage, and a lack of foresight. If the latter then they richly deserve all the failure they've reaped. I'd love to know.
- wtracy 13y ago
  Well, it's possible that the model of selling an OS to phone manufacturers has been destroyed by Google giving an OS to manufacturers as a loss-leader.
  - simonh 13y ago
    There's nothing inevitable about that though. It only works if the freebie is sufficiently attractive. For example being free hasn't helped Linux succeed on the desktop, despite it's strong position in the server space.
    - camus 13y ago
      This can change with the open web as software and services are moving to webapps and apis, BUT asically , Linux lacks of attractive software ,services and business providing services , for the public and businesses. And no , Open Office is not a replacement for MS office, nor Gimp can replace Photoshop for professionals. Linux is not hard to learn, has great guis and works on most of the hardware. There is potential but all the services are not there yet. Android is valuable because of all the service intergration it offers, not because it is *nix based , same with IOS.
sirkneeland 13y ago
As a Nokia employee, I can't yet comment on whether this is ultimately good or bad for us and what our dreams were. I can say that it is a very emotional time for us Nokia employees, and I can only imagine it is even more so for those of us who are also Finns.
peterjs 13y ago
Software is eating the world. For real now. And it is eating hardware. This is such a strong force that even old time franchises like Microsoft and Motorola can't do anything about it. And apparently "pure software" companies don't mind venturing into it. They know it's software, for the most part, and believe vertical integration is worth the trouble with the messy hardware parts. How deep is the integration anyway? Did Google and Microsoft end up owning the manufacturing plants? Apple is known to outsource the manufacturing itself.
thewarrior 13y ago
Microsoft has destroyed companies before : See : http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_i4i_filing/ http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_...
timdellinger 13y ago
"Microsoft will draw upon its overseas cash resources to fund the transaction." This is an important aspect of the deal - bringing money earned overseas into the US is often costly (taxes, etc.). As a result, US companies often end up with cash sitting overseas with nothing to spend it on, and are hesitant to take the hit that happens when they bring it to the US... so this is a great way for Microsoft to use that money in an effective way. According to this article, Microsoft has $60 Billion sitting offshore in order to avoid US taxes: http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple-google-among-top-u-s-companies-parking-cash-offshore-to-reduce-taxes-study-says/ http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple...
- nickff 13y ago
  Microsoft also used offshore money to buy Skype.
- hga 13y ago
  Key graff: "The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate." As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.
  - dvmmh 13y ago
    No corporation pays 35%. There are far too many loop holes. The US has the highest rates ON THE BOOKS if you take ZERO deductions and write-offs. http://thinkprogress.org/economy/2013/04/01/1804801/no-american-corporations-aren039t-paying-the-world039s-highest-tax-rate/ http://thinkprogress.org/economy/2013/04/01/1804801/no-ameri...
    - hga 13y ago
      Trivially falsified (the link): "Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30.... And well below the 25.6% companies paid on average from 1987 to 2008." I wonder just what happened starting in early Federal FY 2009, which started on October 1, 2008. Perhaps this: https://en.wikipedia.org/wiki/Great_Recession https://en.wikipedia.org/wiki/Great_Recession? Now, when we're talking about seriously profitable companies I don't deny there are tax breaks to be had, some easy, but does anyone think these companies are better off focusing more on financial engineering or software and electrical engineering? You might compare the parking of cash offshore to Microsoft's buying a $100K Treasury instrument whenever they had too much cash on hand, as their first CFO was horrified, amazed and delighted to discover. ADDED: is this double taxation? In another HN item on this, it was commented that this parked money has already been subject to local taxes: https://news.ycombinator.com/item?id=6321925 https://news.ycombinator.com/item?id=6321925 I know we do that with personal income taxes, absent a tax treaty with the other nation.
sravfeyn 13y ago
This news may sound exciting/disappointing to the developed countries, but it is certainly extremely disappointing for people in third-world countries, especially India. It is not at all hyperbole to say 'Nokia played a key role in India's mobile penetration'. They sell affordable, reliable and rigid phones for rough use in rural places of India. And I think it's true for most other countries like Africa. On the other hand Microsoft mostly makes premium software and hardware. I don't know any affordable tool(w.r.t developing countries) from Microsoft. This may put Microsoft in a better position in terms of smartphone. But in other terms this may be a step towards 'diminishing power of poor people'.
- vshade 13y ago
  On the other hand, the low end lumias are more usable than most of same priced android phones in Brazil, I know that here and parts of africa is the way the market is going. I hope they don't stop serving this market.
- avemuri 13y ago
  The low end android sets made by Micromax, Lava etc. are priced very affordably (Rs3000-5000/$50-80). And the market is still flooded with even cheaper feature phones. I don't see how the power of poor people is diminished.
- gtirloni 13y ago
  Motorola is building featurephones until this day. Lots of them. Nokia is not going to abandon that market (India's) anytime soon while they are selling there. I would not worry about it too much.

395 points by SwaroopH 13y ago

I think this has been expected since the Nokia Windows Phone bet. I suspect that this is not unrelated to the Ballmer departure. I'm not sure it does either company much good. If anything it looks to me like a panic move of two companies who while from te outside they seem huge and successful to many are actually seeing the writing on the wal and have no real plan for the future. This won't make Microsoft competitive with Apple where it wants to be despite the hopes of Redmond.

deleted 13y ago

[deleted]

eonil 13y ago
How's on Motorola?
- twodayslate 13y ago
  or HTC?
wtallis 13y ago
Samsung is several times larger than Google. Their phone division probably isn't, but it makes no business sense to buy part of a vertically-integrated market leader.
taspeotis 13y ago
Well from a bit of Googling it would seem that Samsung has a market capitalisation of ~USD$120B vs. Nokia's ~USD$14B. I'm unsure of what % of Samsung is mobile devices, but one would assume Google would have to throw a lot more money at Samsung to buy their devices division than MS is spending to buy Nokia (according to their press release: USD$7.17B)
- deleted 13y ago
  [deleted]
- sanxiyn 13y ago
  > I'm unsure of what % of Samsung is mobile devices Samsung Electronics is a public company, and this information is public. For Q2 2013, mobile devices accounted for 60% of sales and 66% of operating profit. http://www.samsung.com/us/aboutsamsung/ir/ireventpresentations/earningsrelease/downloads/2012/20130726_conference_eng.pdf http://www.samsung.com/us/aboutsamsung/ir/ireventpresentatio...
larrykubin 13y ago
Samsung has a market cap of around 200 billion now. Google couldn't afford it.
jacques_chester 13y ago
Samsung has ~5x the revenues, ~5x the assets and ~2x the profit of Google. Unless Google wants to leverage itself for the next 10 years to acquire a company that does engineering services, shipbuilding, heavy industrial manufacture, life insurance, theme parks, aerospace and oh I guess some mobile devices here and there, I don't see this happening. Edit: for the interest of passers-by, the deleted comment proposed that Google might buy Samsung. It was possibly a light-hearted remark, but luckily nitpicking folk like yours truly were here to save the thread from inaccuracy. :D

cicloid 13y ago

With the apparent growing trend on emerging markets of Windows Phones (the Lumia series produced by Nokia, and pushed by carriers on LATAM like Telcel/America Movil) This seems like a great move from MS, they have bought more runway. But come on, the move was telegraphed a couple of years ago.

IanChiles 13y ago

And now Microsoft has a hardware division. I can easily see most hardware vendors being ousted by the trio of Google/MS/Apple - all of whom now either make or have been making their own hardware to go along with their software. And so the walled garden grows...

spullara 13y ago
They already have several hardware products including Xbox, Kinnect, keyboards, mice, and the Surface.
- IanChiles 13y ago
  But now they're in control of a hardware vendor - one in a position to allow them to close off WP8 to other OEMs, and potentially a future version of Windows.
- kabdib 13y ago
  With the exception of the folks doing keyboards (which they have been serially been screwing up for the last ten years) Microsoft has some very good hardware people. The Surface was a nice piece of kit, but way expensive (for unavoidable reasons, I hear) and running the wrong software (also for unavoidable reasons).
  - cbhl 13y ago
    I remember their developer evangelists were running around showing off some $3000 Samsung tablet PC prior to the Surface and Surface Pro being released. People think the Surface is expensive because they compare it to the iPad or Nexus 7/10 product lines, but it seems like Windows RT is closer to a port of Windows 8 to ARM than anything else, which makes it seem odd that you'd think to run Windows Rt on a $200 tablet.
    - valleyer 13y ago
      I think (s)he was talking about what used to be called "Surface", which is now called "PixelSense".

wfunction 13y ago

I hope Ballmer and Gates have a dedicated CEO in mind now that Ballmer's leaving... very few people will be able to lead a company this large, and it will be quite a tragedy if Microsoft's reputation declines and takes down Nokia with it.

magickastle 13y ago
I heard a rumor that Paul Graham is being courted, but it is probably disinformation.
- kabdib 13y ago
  Microsoft could do a lot worse :-)
- nosefrog 13y ago
  I would be very surprised if either party was interested in PG being CEO of Microsoft.
- untog 13y ago
  Haha good lord no. I doubt either party would be in any way interested.

anomaly_ 13y ago

I found this statement interesting - "Microsoft will draw upon its overseas cash resources to fund the transaction." I've seen it mentioned quite a few times that tech companies end up with massive overseas cash reserves they can't repatriate for tax reasons. Anyone with better knowledge of finance/tax want to chime in with whether this makes the deal even more attractive for MS?

tanzam75 13y ago
The corporate tax rate in the United States is 35%. The corporate tax rate in Ireland is 12.5%. (This is why multinationals like to incorporate their European subsidiaries in Ireland.) If Microsoft moved money in the United States, it would pay the difference in taxes -- namely, 22.5%. But if Microsoft spent the money outside the United States, then it would not pay this difference. Incidentally, Finland will be reducing its corporate tax rate next year, from 24.5% to 20%.
sjwright 13y ago
A summary of the tax arrangements used by some large American multinationals, including Microsoft, Google, Facebook, Apple, Oracle and Adobe: http://en.wikipedia.org/wiki/Double_Irish_arrangement http://en.wikipedia.org/wiki/Double_Irish_arrangement As I understand it, these international profits remain in the tax-haven-resident Irish company, and cannot be repatriated to the US parent without incurring an undesirable taxation event. It's highly likely that Finland-based Nokia is a fiscally efficient purchase for Microsoft. Both Finland and Ireland are EU countries, are in the Eurozone, and have a customs union. (It would be interesting to compare this to Google's purchase of Motorola Mobility, which was an American company.)

Steko 13y ago

Speaking of handset makers that missed the revolution, I wonder who will pick up RIM as they circle the drain. Microsoft is probably the favorite right?

tanzam75 13y ago
Now that Microsoft is buying Nokia, it seems unlikely that Microsoft will buy Blackberry. Unless it's a firesale for the patents. Note: RIM changed its name to Blackberry Ltd, with a stock ticker of BBRY.
- bodyfour 13y ago
  I'd say Blackberry is the big loser in this deal, since it probably takes one of their more plausible options off the table.
  - Steko 13y ago
    RIM's two selling points still seem as relevant as they did last week for MS: patents and the loyal but shrinking customer base.
    - tanzam75 13y ago
      How loyal would the customer base be if Blackberry switched to Windows Phone? Would they be any more loyal than Symbian users when Nokia did the transition? This is why I mention only the patents. Those are clearly valuable. The customer base is debatable.
      - Steko 13y ago
        If Blackberry goes into liquidation the customer base breaks more or less like the market and WP get's .1% market share. Otherwise if they buy BB and can hang onto half of those customers. That would almost double WP's market share. Those customers are worth more to also ran WP than anyone else.
    - 13y ago

kyro 13y ago

Great move by Microsoft. This is an acquisition that arguably puts Microsoft mobile capabilities above that of Google's, and closest to Apple's. They're getting industry veterans with great design talent. They're getting a Lumia product that has the best build quality of any non-Apple smart phone. They're acquiring proven channels to access global markets. Both Nokia and Microsoft have been floundering in the mobile space recently; neither have had any real explosive successes. Together they might make some really compelling offerings. I'm not a fan of their mobile OS, but I am a huge fan of Nokia's latest smartphones, and if Nokia design's talent can figure out how to introduce a better UI, I'd seriously consider getting The Windows Phone as my next smartphone.

Shamanmuni 13y ago
But they were together already. This past time Nokia only developed Windows phones and Microsoft paid for the marketing of the Lumia. Nokia had Stephen Elop as CEO, for crying out loud. We already knew Nokia was a part of Microsoft. This is not a move, just a formality; the low price gives you another hint. If the partnership Microsoft-Nokia could have changed their positions in the mobile sector, it would have happened years ago. Nothing will change as a result of this.
- kyro 13y ago
  It's more than that. Microsoft is acquiring the Lumia brand. This gives them the ability to bundle both hardware and software to create one simple, cohesive experience. They will no longer be pushing the Nokia Lumia with Windows Phone 8, but The Microsoft Phone. And they can now brag about how they are the smartphone with the best camera. From a marketing perspective, this makes lots of sense. Lots of that is speculation on what I hope Microsoft does with this, namely adopting Apple's marketing simplicity and control of the user experience.
  - count 13y ago
    I wonder if such bundling will be an issue with their existing anti-trust issues?

mindprince 13y ago

I found Microsoft's strategic rationale for this deal interesting: http://www.microsoft.com/en-us/news/download/press/2013/StrategicRationale.pdf http://www.microsoft.com/en-us/news/download/press/2013/Stra...

cpeterso 13y ago

The press release says Microsoft will acquire Nokia’s Devices & Services business and license Nokia’s patents and mapping services. So what happens to the rest of Nokia?

tanzam75 13y ago
> So what happens to the rest of Nokia? Nokia keeps the other two divisions. Nokia is now primarily a telecoms infrastructure company, like Alcatel-Lucent. They're pretty closely matched. Alcatel-Lucent had €14.4 billion of revenues in 2012, while Nokia Siemens Networks took in €13.1 billion of revenues. There's also the mapping division, but that's just 10% of the new Nokia's revenues. I'm surprised Microsoft did not buy it, as Google and Apple both own their own maps. In fact, I wonder if the mapping division wasn't what scuttled the previous attempts to reach a deal.
- tincholio 13y ago
  > Nokia Siemens Networks NSN is no longer Nokia Siemens Networks; it's Nokia Solutions and Networks now, and Siemens is no longer part of it.
  - tanzam75 13y ago
    The deal closed in August 2013. It would have been inaccurate to refer to it as Nokia Solutions and Networks when giving 2012 results.
gph 13y ago
"Its device business now gone, Nokia's plan is to focus on three core technologies: NSN (its network infrastructure) HERE (its maps and location-based services); and Advanced Technologies (a licensing and development arm)."[1] It'll still exist. Most of the top executives are moving to Microsoft as part of the deal though. I am curious if this deal required shareholder consent of any type. I'm sure the board had to approve. Still I don't know how I'd feel if I was holding onto a decent chunk of Nokia stock right now and I didn't get any say in selling out our core business. [1]http://www.theverge.com/2013/9/2/4688530/microsoft-buys-nokias-devices-and-services-unit-unites-windows-phone http://www.theverge.com/2013/9/2/4688530/microsoft-buys-noki...

general_failure 13y ago

So, is there any Nokia left after all this?

tanzam75 13y ago
> So, is there any Nokia left after all this? Yes, it leaves Nokia Siemens Networks and HERE Maps. Last quarter, NSN accounted for 49% of Nokia revenues, and 108% of operating profit. (Not a typo -- the phone division lost money.) HERE Maps is insignificant, but for some reason Nokia wanted to hang on to it. So, Nokia now has a slightly increased operating profit, plus an extra €5.4 billion from Microsoft. According to the press release, when you subtract out the purchase price for the "S" half of NSN, Nokia has €7.8 billion in net cash. For a company that closed yesterday at a market cap of €11 billion.

ChuckMcM 13y ago

Wow, I can't say I'm completely surprised but still. It is an amazing thing. It has to be pretty scary these days to be a phone maker.

test001only 13y ago

What would this mean for all the Nokia feature phones ? The latest Asha series was very good and selling pretty well at least in India. How would this figure in MS strategy? Are they going to ditch it? That would be sad, because Nokia still makes phones that can withstand rough use. On the other side would Nokia start manufacturing Laptop in future. I would really like Nokia design team to come up with a good Windows laptop!

apike 13y ago
One of Microsoft's documents about the acquisition calls out that it is getting the Asha brand and a 10-year license to the Nokia brand for feature phones, so I expect that line will stay for now.
- abrowne 13y ago
  I wonder if the Asha design will go from Meego-like with Nokia squircles to a Metro-like square theme? I personally love my Asha 501, but wouldn't want a WP8-light version. Also, will they "upgrade" Nokia Xpress's (proxy browser) backend to use the IE engine in place of Gecko?

simula67 13y ago

Slightly off-topic : For hackers outside the USA/EU I think Microsoft succeeding can be a bad thing since Macs are really expensive here and Microsoft silently allowing piracy means that everyone uses Windows. I feel that ISVs better supporting Linux would be a nice thing and one of the important things to happen for that is for Windows to loose its monopoly ( second is of course some sort of agreement between all Linux distros around some standard ). I can't but feel that is to be a distant dream, since Microsoft seems to have infinite pockets and can buy their way out of any trouble for years to come.

yalogin 13y ago

Motorola and now Nokia, the last of the previous era big wigs have fallen. 13 years ago Lucent, Motorola, Ericsson, Sun, Nortel were huge. Now they are all gone. Even HP, Dell are no longer leading. That is a really short time span for a company to be on top of the world and disappear. Is this the expected life span of a tech company?

foobarbazqux 13y ago
13 years ago was the dot-com bubble. What about Microsoft, IBM, Apple, Intel, Oracle?
- brokenparser 13y ago
  IBM doesn't count because that company is almost as old as the invention of the computer itself.
  - pilsetnieks 13y ago
    IBM is actually older than the computer, it was founded in 1911. (Unless you count Babbage's machine.)
    - brokenparser 13y ago
      That's almost exactly what I wanted to write until I read the definition of his analytical engine on Wikipedia. Although IBM says they formed through a merger of three companies in 1911, it's origins started in the 1880s and I count that as the true beginning of IBM. Note that in 1911 the company was called CTR and they kept that name until 1924, so either way I don't think 1911 accurately reflects the founding year of IBM.
besquared 13y ago
Specialized hardware was always kind of a stopgap. Even now you can see networking companies facing the double threat of virtualized networking in software. Software is eating the world as Andreessen famously stated. As to the life span of tech companies I think it will only get shorter. One thing I find interesting is that it's difficult for humans (including myself) to really internalize the overall effects of compounding interest. I read a comment the other day in which the author was joking about how they can't wait until 2023 when they get to look back and feel how they do now looking back at 2003. It doesn't always seem that the speed at which things are happening is increasing dramatically even if that's the case. The progress between 2003 until now will be completely overwhelmed just a few years from today.

josephscott 13y ago

I wonder if this played into Ballmer leaving. Odd to have a massive re-org and massive purchase, only to have the CEO turn around and leave right afterwards.

nextw33k 13y ago
The timing of this is completely laid out. It looks too perfect and these deals take time to arrange and agree, they are not done in a week.

annnnd 13y ago

Nokia, rest in peace - we will miss you. Your phones were legendary.

berntb 13y ago
Hear hear. A black T-shirt today. :-(
harrytuttle 13y ago
Erm, they still are and will be in the future. they bagged the guys who designed them as well.
- nextw33k 13y ago
  You might be unfamiliar with what happens after a corporate merger. Usually there is a decision to remove duplication within the corporation. If you were Elop next year running MS in Redmond, who would you lay off? The people in your building or those in the opposite side of the world in Finland? Update: On a side note, manufacturing usually stays until the machines are no longer worth using. Then they shut the place down claiming inefficiencies and build a new factory somewhere else. They don't mention the lack of investment for 10 years of course.
  - gtirloni 13y ago
    On the software front, that already happened when Nokia decided to use WP8 and ditch their own software. On the hardware front, MS might actually enjoy having more hardware engineers to help with the Surface/Xbox stuff. HR, payroll, etc might be not that safe though.
trailfox 13y ago
Sad to see Nokia going the way of the dodo.

devx 13y ago

Seems like Elop stayed true to his nickname - of a trojan horse. He never really worked for Nokia. He's been working for Microsoft the whole time, just to sell it for this low price. How the hell are the shareholders okay with this? I'm shocked it sold for under $10 billion. Nokia's total valuation is about 15 billion, and you'd have to imagine they'd have to pay a 30 percent premium when buying it, so that's $20 billion for the whole. I assume the devices division was worth at least half of that. Didn't Nokia already sell the telecom part?

auctiontheory 13y ago
Presumably Nokia's management thought they were getting a good deal for the devices business, since its long-term value to Nokia seems to be approaching zero. Now if you ask: was Windows Mobile all a plot to blow up Nokia? That's an interesting question. I can't confirm that.
tluyben2 13y ago
That's what I thought when Elop went to Nokia and even in hindsight it seems to be the case. As a share holder, I definitely would ask questions. It seems hard to prove though; their market was falling anyway, but there are a lot of what ifs: like if they would've done Android, continued with their own OS but made it really open etc.
trailfox 13y ago
> Seems like Elop stayed true to his nickname - of a trojan horse. Wonder if it was intentional to run Nokia into the ground or just sheer incompetence?
- discodave 13y ago
  Remember Hanlons razor...
pasiaj 13y ago
There is a running joke about the irony of the board chairman Siilasmaa of F-Secure letting in a Trojan Horse. http://fi.wikipedia.org/wiki/Risto_Siilasmaa http://fi.wikipedia.org/wiki/Risto_Siilasmaa

ximeng 13y ago

Annual cost synergies of 600MM within 18 months - sounds like they plan to kill 3000 jobs. http://www.microsoft.com/en-us/news/download/press/2013/StrategicRationale.pdf http://www.microsoft.com/en-us/news/download/press/2013/Stra... (page 21)

jcrei 13y ago

The old fat couple in the room had a dance and #microsoft just ran out of things to say, so in order to avoid an awkward moment (high end sales are abysmal) he proposed. #nokia looked around, didn't want to die alone, and like any scared middle aged woman, said yes.

simonh 13y ago

This is the ultimate indictment of Steve Ballmer's "I like our strategy, I like it a lot" statement. This is the final admission that their strategy of licensing a mobile OS to phone manufacturers, just as they licensed desktop Windows to PC makers, has completely failed. This must have been in the works for months, so now finally the other shoe has dropped and we know why he had to leave. There's no way he could save face over something like this. Just to be clear, the strategy itself wasn't the problem, just look at Android, the problem was that technically their product was technically deficient. They failed to execute the strategy effectively. What I have always wondered is whether this was simply due to hardware limitations of the day, or whether the old Windows Mobile was deliberately held back technically to prevent it competing with Desktop Windows. If the former then Microsoft just suffered from a form of first mover's disadvantage, and a lack of foresight. If the latter then they richly deserve all the failure they've reaped. I'd love to know.

wtracy 13y ago
Well, it's possible that the model of selling an OS to phone manufacturers has been destroyed by Google giving an OS to manufacturers as a loss-leader.
- simonh 13y ago
  There's nothing inevitable about that though. It only works if the freebie is sufficiently attractive. For example being free hasn't helped Linux succeed on the desktop, despite it's strong position in the server space.
  - camus 13y ago
    This can change with the open web as software and services are moving to webapps and apis, BUT asically , Linux lacks of attractive software ,services and business providing services , for the public and businesses. And no , Open Office is not a replacement for MS office, nor Gimp can replace Photoshop for professionals. Linux is not hard to learn, has great guis and works on most of the hardware. There is potential but all the services are not there yet. Android is valuable because of all the service intergration it offers, not because it is *nix based , same with IOS.

sirkneeland 13y ago

As a Nokia employee, I can't yet comment on whether this is ultimately good or bad for us and what our dreams were. I can say that it is a very emotional time for us Nokia employees, and I can only imagine it is even more so for those of us who are also Finns.

peterjs 13y ago

Software is eating the world. For real now. And it is eating hardware. This is such a strong force that even old time franchises like Microsoft and Motorola can't do anything about it. And apparently "pure software" companies don't mind venturing into it. They know it's software, for the most part, and believe vertical integration is worth the trouble with the messy hardware parts. How deep is the integration anyway? Did Google and Microsoft end up owning the manufacturing plants? Apple is known to outsource the manufacturing itself.

thewarrior 13y ago

Microsoft has destroyed companies before : See : http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_i4i_filing/ http://www.theregister.co.uk/2009/09/09/microsoft_destroyed_...

timdellinger 13y ago

"Microsoft will draw upon its overseas cash resources to fund the transaction." This is an important aspect of the deal - bringing money earned overseas into the US is often costly (taxes, etc.). As a result, US companies often end up with cash sitting overseas with nothing to spend it on, and are hesitant to take the hit that happens when they bring it to the US... so this is a great way for Microsoft to use that money in an effective way. According to this article, Microsoft has $60 Billion sitting offshore in order to avoid US taxes: http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple-google-among-top-u-s-companies-parking-cash-offshore-to-reduce-taxes-study-says/ http://www.forbes.com/sites/connieguglielmo/2013/08/01/apple...

nickff 13y ago
Microsoft also used offshore money to buy Skype.
hga 13y ago
Key graff: "The average tax rate these companies currently pay to other countries on this income is just 6.9 percent, well below lower the 35 percent statutory U.S. corporate tax rate." As I recall we (the US) have the highest corporate income taxes in the developed world. It would be a gross dereliction of management's duty to shareholders to repatriate it unless really needed.
- dvmmh 13y ago
  No corporation pays 35%. There are far too many loop holes. The US has the highest rates ON THE BOOKS if you take ZERO deductions and write-offs. http://thinkprogress.org/economy/2013/04/01/1804801/no-american-corporations-aren039t-paying-the-world039s-highest-tax-rate/ http://thinkprogress.org/economy/2013/04/01/1804801/no-ameri...
  - hga 13y ago
    Trivially falsified (the link): "Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30.... And well below the 25.6% companies paid on average from 1987 to 2008." I wonder just what happened starting in early Federal FY 2009, which started on October 1, 2008. Perhaps this: https://en.wikipedia.org/wiki/Great_Recession https://en.wikipedia.org/wiki/Great_Recession? Now, when we're talking about seriously profitable companies I don't deny there are tax breaks to be had, some easy, but does anyone think these companies are better off focusing more on financial engineering or software and electrical engineering? You might compare the parking of cash offshore to Microsoft's buying a $100K Treasury instrument whenever they had too much cash on hand, as their first CFO was horrified, amazed and delighted to discover. ADDED: is this double taxation? In another HN item on this, it was commented that this parked money has already been subject to local taxes: https://news.ycombinator.com/item?id=6321925 https://news.ycombinator.com/item?id=6321925 I know we do that with personal income taxes, absent a tax treaty with the other nation.

sravfeyn 13y ago

This news may sound exciting/disappointing to the developed countries, but it is certainly extremely disappointing for people in third-world countries, especially India. It is not at all hyperbole to say 'Nokia played a key role in India's mobile penetration'. They sell affordable, reliable and rigid phones for rough use in rural places of India. And I think it's true for most other countries like Africa. On the other hand Microsoft mostly makes premium software and hardware. I don't know any affordable tool(w.r.t developing countries) from Microsoft. This may put Microsoft in a better position in terms of smartphone. But in other terms this may be a step towards 'diminishing power of poor people'.

vshade 13y ago
On the other hand, the low end lumias are more usable than most of same priced android phones in Brazil, I know that here and parts of africa is the way the market is going. I hope they don't stop serving this market.
avemuri 13y ago
The low end android sets made by Micromax, Lava etc. are priced very affordably (Rs3000-5000/$50-80). And the market is still flooded with even cheaper feature phones. I don't see how the power of poor people is diminished.
gtirloni 13y ago
Motorola is building featurephones until this day. Lots of them. Nokia is not going to abandon that market (India's) anytime soon while they are selling there. I would not worry about it too much.