Nokia Received One Billion Dollars for Microsoft Deal

This was reported but unconfirmed earlier, however we now know that part of the deal to partner with Nokia included Microsoft seeding a Billion dollars to aid in development and marketing. While Microsoft is’t commenting on the news, analysts seem to be generally positive and agree it was a good deal, saying:

“This gives Microsoft scale and allows Nokia to rip out costs,” said Colin Gillis, an analyst at BGC Partners in New York, who recommends buying Microsoft shares. “Microsoft is getting the platform boost that comes from acquiring a Nokia for about a billion dollars.”

Given Nokia’s scale and the additional costs it stands to save by outsourcing software R&D to Microsoft, the real burden is on Microsoft to deliver here. Microsoft CEO Steve Ballmer is under increasing pressure because of a company stock that has been completely flat for a decade despite the stratospheric increase in profits over the same period (even with dividend payouts taken into account.)

Microsoft has seen growth in the enterprise market in the past decade that is as remarkable in many ways as that of Apple’s resurgence in the same period, but investors chaff at Redmond’s inability to hold on to markets it once dominated or even founded. While Enterprise level business will always be huge, and cloud computing is still an open game for anyone to win, the mobile space is seen as the new PC space of the next decade and Microsoft is floundering (despite WP7 slowing the bleeding a bit).

Source: Bloomberg Businessweek

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