Analysts divided over Microsoft decision to buy Nokia
Microsoft CEO Steve Ballmer speaks during a press conference of the Finnish mobile manufacturer Nokia in Espoo on Tuesday. Nokia announced the sale of its mobile phone unit to Microsoft for 5.44 billion euros ($7.17 billion), bringing to an end its days as a phone maker. PHOTO | afp
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Ross MacMillan, analyst at Jefferies, said he was generally positive about the deal, which gives Microsoft expertise in manufacturing and the supply chain, as well as an important mapping service.
Washington. Analysts were divided over whether Microsoft’s move to buy Nokia’s mobile phone business would have the intended effect.
The deal worth $7.2 billion (5.44 billion euros) gives Microsoft Nokia’s mobile phone operations along with an array of patents and licenses to help compete with rival platforms from Google and Apple, and manufacturers such as Samsung.
The deal is “transformational. We are trying to accelerate our phone market share,” said Microsoft chief executive Steve Ballmer in a conference call.
Ballmer said in an email to Microsoft employees that the deal with Finland-based Nokia is “a bold step into the future and the next big phase of the transformation we announced on July 11,” when the company unveiled a reorganization to concentrate on “devices and services.”
However, analysts give mixed reactions over the deal which also moves Nokia chief executive Stephen Elop, who was hired from Microsoft in 2010 to turn the company around, back to his former firm, and makes him a likely candidate to succeed Ballmer when he retires.
Ross MacMillan, analyst at Jefferies, said he was generally positive about the deal, which gives Microsoft expertise in manufacturing and the supply chain, as well as an important mapping service.
MacMillan said Microsoft sees “better economics owning the hardware” and should make a profit of $40 per unit as the owner, up from $10 per unit, allowing the deal to pay off with annual smartphone sales of 50 million.
Ramon Llamas, of the research firm IDC, said the tie-up “is all about alignment.”
Llamas said integrating Nokia may help by “having everything from hardware to software to applications to services” under one roof.
He added that the Microsoft-Nokia partnership “has been succeeding, but not to the degree they would like to see,” and said the acquisition could help create a more unified marketing effort.
Walter Pritchard at Citi said the deal casts doubt on speculation that Microsoft might split up to concentrate on different segments, which some analysts had hoped for after Ballmer’s announcement that he would retire within a year.
“This acquisition really does lock the successor into the current strategy,” Pritchard said. (AFP)
