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Microsoft Acquires Nokia's Device Business in Mega Deal

Microsoft Acquires Nokia's Device Business in Mega Deal
Image credit: Dawn.com

It's been a busy month for Microsoft.

A little over a week after announcing that CEO Steve Ballmer will retire, Microsoft inked a deal to buy Nokia’s core smartphone business and associated patents for $7.2 billion cash.

The significant purchase by Microsoft represents the Redmond, Calif.-tech giant’s efforts to become competitive in the mobile phone space, alongside names like Apple, Samsung and Google.

Related: Steve Ballmer to Retire as Microsoft CEO

The deal, announced in a joint statement from the two corporate boards today, includes 3.8 billion euros for the device portion of Nokia’s business and another 1.65 billion euros for the related patents, totaling 5.44 billion euros, or $7.2 billion. The transaction is expected to be finalized in the first quarter of 2014, after regulatory approvals are complete.

Microsoft will also get 32,000 Nokia employees as part of the deal. “Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution,” Microsoft's Ballmer said in a statement.

Related: Why All the Hate for Microsoft CEO Steve Ballmer?

Meanwhile, Microsoft itself will be losing one key employee – Ballmer himself. Just last week, Ballmer announced plans to retire at some point in the coming 12 months. Ballmer, 57, has been with Microsoft since 1980 and took the helm from Bill Gates in 2000. His critics say he failed to lead the tech giant to innovate fast enough and prevented it from being competitive in the mobile arena. The massive deal to takeover Nokia’s mobile arm is likely to help Microsoft recover some lost ground in the second category.

With the deal announcement, Stephen Elop has stepped out of his role as CEO of Nokia and will become the vice president of devices and services for the Finnish tech-giant, fueling speculation that he may be in line for Ballmer’s spot at the head of Microsoft. Elop is a former Microsoft executive, having the led the company's business division from 2008 to 2010.

As part of the deal with Nokia, Microsoft will own the Lumia brand, a smartphone that sold 7.4 million units in the second quarter of 2013. Also, Microsoft will take over the Nokia mobile phones business unit, which has hundreds of millions of customers across the globe, according to the joint statement.

Related: 6 Reasons Why Mark Hurd Should Be Microsoft's Next CEO

Catherine Clifford is a senior writer at Entrepreneur.com.

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