Microsoft Corp. struck a $7 billion deal to acquire Nokia Corp.'s core cellphone business, a bold move to try to catch up in a fast-growing mobile business that is now dominated by Samsung and Apple.
The companies said late Monday that Microsoft will pay €3.79 billion to buy "substantially all" of the Nokia business, which includes its smartphone operations. The Redmond, Wash., company will also pay €1.65 billion to license Nokia's patents, the companies said, bringing the deal to €5.44 billion, or $7.18 billion.
Stephen Elop, Nokia's CEO, and several other executives are joining Microsoft as part of the deal. Mr. Elop, a former Microsoft executive, is among the names being circulated as Mr. Ballmer's successor.
My knee-jerk reaction was to make fun of both Microsoft and Nokia for the two companies' utter failure in the iOS/Android era. But actually, I think this deal probably makes sense. Nokia clearly wasn't going to make it alone, so its shareholders sold out (in an all cash deal) while they could. Meanwhile, Microsoft clearly needed to do something bold if it wanted to be a player in the smartphone market, and it's not like all that overseas cash it is sitting on is doing the company any good. I mean, even if they end up writing down the entire $7 billion acquisition, it'll barely make a dent in their balance sheet, so why not take a flyer?