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Microsoft-Nokia Merger: Lumia Sales Make 'Timing Right'

By Craig Galbraith
September 03, 2013 - News

**Editor's Note: Please click here for a recap of the biggest communications mergers in Q2 2013.**

Microsoft has taken a huge step forward in the mobility space, announcing Monday that it will buy Nokia's Devices and Services business for US $7.2 billion.

Microsoft says it wants to speed up the growth of its share and profit in mobile devices through faster innovation, and unified branding and marketing. It's hoped that for Nokia, the deal will strengthen the company's financial position.

The two companies formed a partnership in 2011 when Nokia began developing its Lumia line of smartphones which feature Microsoft's Windows Phone operating system. This acquisition, rumored for a while now, seems to be a natural extension of that team-up.

“Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services," said Steve Ballmer, Microsoft CEO. “In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution."

Finland-based Nokia, once the dominant global leader in cellphone manufacturing, found itself left behind by Apple and a handful of Android manufacturers when the smartphone revolution first took hold several years ago. The company is now locked in a battle for third place – a distant third behind Samsung and Apple – a position that Microsoft hopes will greatly improve with today's news.

“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 Nokia's board of directors and the company's 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. Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space."

Terms of the deal call for Microsoft to acquire substantially all of Nokia’s Devices and Services business, including the mobile phones and smart devices business units, plus the design team, production facilities, related support teams and more.

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