Microsoft acquires Nokia's phone business for $7.2 billion

Read this post to know about the recent acquisition of Nokia Phone business by Microsoft for $7.2 billion. This post explains the detail of the deal and the impact of deal on Mobile business across the world.

The giant business leader Microsoft Corporation has decided to purchase Nokia Corporation, through which all the Nokia Devices and Services business, all license and patents related to Nokia will be handled by Microsoft Corporation.

In this agreement, Microsoft Corporation has agreed to pay EUR 3.79 billion, in order to purchase the Nokia Corporation. It has to further pay a sum of EUR 1.65 billion for getting the ownership over the patents and license of the Nokia Corporation. Therefore, the deal counted EUR 5.44 billion for Microsoft Corporation. The agreed sum has to be paid through cash, in this deal. To close such a big deal Microsoft Corporation has to collect its overseas fund. All the related formalities and regulatory approvals related to the deal have to be completed by first quarter of 2014, as per the decision made by the Nokia's shareholders.

This deal has made good earning, has fortified its financial position and gave a safe and sound base for the future investments of the Nokia Corporation.

On the other hand, there is huge opportunity for Microsoft, as the Nokia's products are trustworthy and have goodwill in the market. Its products like Nokia Lumia, Nokia Asha, etc are in great demand. Microsoft can generate huge amount of benefit by creating synergy through utilizing its research & development capability, it can innovate new technologies much faster then other telecom companies. Now Microsoft has increased level of synergy, goodwill, brand name, better marketing environment and capability to innovate faster. It's a time for tough competition for the telecom sector.

Microsoft purchased Nokia because it had innovative power that can be easily seen in mobile phones of all sort range. Nokia always has excellent talent in the major areas such as engineering, hardware designing, manufacturing, supply chain, transportation, communication etc.

Now the talented Nokia's family will have to work with Microsoft. Through this deal Microsoft got the talented human resource, technology, as an asset for its future. Like this Microsoft can generate huge amount of revenue for its shareholders.

Through the operations that are planned to be transferred to Microsoft has estimated sales return of almost half of Nokia's net sales for last year i.e. 2012 or EUR 14.9 billion. An estimated sale of the business units of Nokia that serves its customers worldwide is around 53.7 million mobile phones.

Although the deal has been made but Microsoft will let Nokia to use the brand name of Nokia and will also have the management power.

Big element of this deal is that Microsoft has got license for 10 years to use the patents although the patent portfolio is there with Nokia; Nokia also gave the right to extend the agreement period to Microsoft. And at the end of the deal Nokia will have the power to use the Microsoft's license. Nokia will have EUR 1.5 billion of financing from Microsoft in the form of convertible notes of three EUR 500 million Trenches. If in the case Nokia decides to draw its option of financing, Microsoft will get back its notes from Nokia.

Both the big technology based companies together will surely result in big and better results. There will be hard time for the other mobile companies. Most of social networking sites and technological base is there with Microsoft whereas the Nokia had good brand image and marketing competency. Together both the companies will lead to greater way to technological development.

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