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Microsoft picks up Nokia business unit, licences

Posted: 04 Sep 2013 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone? design? mobile devices?

Microsoft Corporation has agreed to purchase the Devices & Services division of Nokia, as well as licence the Finnish firm's patents and mapping services for a total of $7.2 billion in cash, according to a joint press announcement released today.

Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia's Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

Under the terms of the agreement, Microsoft's acquisition will include Nokia's Mobile Phones and Smart Devices business units as well as its design team, operations including all Nokia Devices & Services-related production facilities. At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide. The operations that are planned to be transferred to Microsoft generated an estimated $19.6 billion, or almost 50 per cent of Nokia's net sales for the full year 2012.

Microsoft is acquiring Nokia's Smart Devices business unit, including the Lumia brand and products. Lumia handsets have won numerous awards and have grown in sales in each of the last three quarters, with sales reaching 7.4 million units in the second quarter of 2013.

As part of the transaction, Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements.

Microsoft will acquire the Asha brand and will licence the Nokia brand for use with current Nokia mobile phone products. Nokia will continue to own and manage the Nokia brand. This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia's mobile phones to serve as an on-ramp to Windows Phone. Nokia will retain its patent portfolio and will grant Microsoft a 10-year licence to its patents at the time of the closing.

Microsoft also announced that it has selected Finland as the home for a new data centre that will serve Microsoft consumers in Europe. The company said it would invest more than a quarter-billion dollars in capital and operation of the new data centre over the next few years, with the potential for further expansion over time.





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