Case Study Nokia
The Deal and its implications:
Nokia will be selling its mobile phone business to Microsoft for $5.0bn. Microsoft will be paying Nokia an additional $2.1bn to license Nokia's patents, which will bring the total value of the deal to $7.1bn in cash.
1. How will it affect Nokia?
The overall impact seems to be Positive
• The mobile phone business had generated 51% of Nokia’s 2012 revenues. The unit which was once the most profitable mobile phone manufacturer in the world made an operating margin of -4.5% in 2012, down from 7% in 2011. Revenues for the mobile phone business fell 34% in 2012 to $20.5bn. Despite the success the new Lumia models, Nokia’s handset division was not going anywhere without its own operating system.
• The patent portfolio and the Nokia brand is still with Nokia. Microsoft is given a 10-year non-exclusive licence or an option for a lifetime licence. This means that Nokia is really selling its business for more than its actual figure.
• …show more content…
The business is highly competitive and could would result in troubles for the important players.
• Nokia will keep its maps software, called Here. Its maps division accounted for 4% of 2012 revenues. As Nokia has the world’s second best maps software after Google, so holding on to it was a good move. Microsoft will separately pay to licence Nokia’s maps software for four years, depending on how well it is managed, the maps division will become a valuable business in its own
Nokia will be selling its mobile phone business to Microsoft for $5.0bn. Microsoft will be paying Nokia an additional $2.1bn to license Nokia's patents, which will bring the total value of the deal to $7.1bn in cash.
1. How will it affect Nokia?
The overall impact seems to be Positive
• The mobile phone business had generated 51% of Nokia’s 2012 revenues. The unit which was once the most profitable mobile phone manufacturer in the world made an operating margin of -4.5% in 2012, down from 7% in 2011. Revenues for the mobile phone business fell 34% in 2012 to $20.5bn. Despite the success the new Lumia models, Nokia’s handset division was not going anywhere without its own operating system.
• The patent portfolio and the Nokia brand is still with Nokia. Microsoft is given a 10-year non-exclusive licence or an option for a lifetime licence. This means that Nokia is really selling its business for more than its actual figure.
• …show more content…
The business is highly competitive and could would result in troubles for the important players.
• Nokia will keep its maps software, called Here. Its maps division accounted for 4% of 2012 revenues. As Nokia has the world’s second best maps software after Google, so holding on to it was a good move. Microsoft will separately pay to licence Nokia’s maps software for four years, depending on how well it is managed, the maps division will become a valuable business in its own