Microsoft rolls dice on Nokia
SAN FRANCISCO — Microsoft's acquisition of Nokia's troubled smartphone business represents a daring $7.2 billion attempt by the software giant and a once-influential cellphone maker to catch up with the mobile computing revolution that threatens to leave them in the technological dust.
The deal announced late Monday offers both companies a chance to make up for lost time with a strategy to meld their software and hardware into a cohesive package, like rival Apple has done. But there are plenty of reasons to question whether the copycat approach will pay off.
Unlike Apple, Microsoft Corp. makes most of its money from software for personal computers — a still-profitable franchise that has gradually been crumbling as smartphones and tablets supplant laptop and desktop machines. By some estimates, more than two-thirds of the computing devices being sold are smartphones or tablets, and there are few signs that trend will change during the next decade.
To complicate Microsoft's transition, the Redmond, Wash., company is being led by a lame duck. Microsoft CEO Steve Ballmer, who negotiated the Nokia deal, recently announced plans to retire within the next year in a tacit admission that the company needs a different leader to blaze new trails.
The managerial limbo raises even more doubts about whether Microsoft will be able to turn Nokia's phones into more effective weapons in a mobile-computing battle against devices powered by Google Inc.'s Android software and Apple Inc.'s iPhone and iPad.
“It's a three-horse race, and Microsoft knows it needs to come up with a more well-defined plan for mobile devices to catch up,” said Darren Hayes, a computer science professor at Pace University in New York. “This was an essential acquisition for them.”
The Nokia deal didn't go over well with investors who have already become weary of Microsoft's largely fruitless efforts to evolve into something more than a PC-dependent company.
Microsoft's stock shed $1.52, or 4.6 percent, to close Tuesday at $31.88. Nokia Corp.'s shares surged $1.22, or 31 percent, to finish at $5.12.
Some analysts are worried about Nokia becoming a financial drag on Microsoft. If the deal closes by early next year, as Microsoft expects, the company will inherit 32,000 Nokia employees. That will represent a nearly one-third increase in Microsoft's payroll of 99,000 employees.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Faulty air bags in 30M vehicles
- First Niagara sets aside $45 million
- Toyota Yaris adds French flair for ’15
- Motoring Q&A: ‘Check engine’ light doesn’t reset itself
- Mini goes mainstream
- Amazon investors’ patience wears thin
- Bond mutual funds continue to carry their weight
- Stocks rise broadly on earnings; Amazon sinks
- Sell-off reins in complacency
- Open enrollment puts varied impact of health care law back in focus
- PUC approves Columbia Gas pipeline extensions program for homeowners