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Microsoft to acquire Nokia's devices business for $7.17 billion

Mark Hachman | Sept. 4, 2013
Microsoft said Monday night that it would acquire Nokia's devices business, including phones, in a bid to control the fate of the WIndows Phone platform.

All told, approximately 32,000 Nokia employees 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, Nokia said.

"For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter," said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today's announcement, Nokia Interim CEO. "After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders."

Microsoft has not been the only OS company to buy its way into the hardware market— Google bought Motorola in 2011 for about $40.5 billion, a deal suspected to be as much for Motorola's enormous patent portfolio as for its hardware business. That much, at least, seems to be true: Motorola hadn't released a phone until its update to the Droid line this summer, as well as the Moto X.

But with Nokia, Microsoft also gains a long-term patent licensing agreement with Qualcomm, as well as other licensing agreements. Nokia will retain its patent portfolio and will grant Microsoft a 10-year license to its patents at the time of the deal closing. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement in perpetuity, the company said. Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.

Microsoft said that it will continue to support the iPhone and Android platforms, but that it "cannot risk having Google or Apple foreclose app innovation, integration, distribution, or economics".

"This is a smart acquisition for Microsoft, and a good deal for both companies," Ballmer wrote in a note to employees. "We are receiving incredible talent, technology and IP. We've all seen the amazing work that Nokia and Microsoft have done together.  Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we expect a smooth transition and great execution."

Microsoft plans to hold a conference call Tuesday morning to explain the deal to Wall Street analysts.


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