Microsoft
has bought Nokia’s struggling mobile phone business for €5.44bn
(£4.61bn) in an effort to “accelerate” its challenge to the dominance of
Apple and Google.
The deal will see Nokia’s current chief
executive, Stephen Elop, join Microsoft and makes him favourite to
replace Steve Ballmer, who announced his retirement last month. Labrokes
said he was now 4/6 favourite to take the role, with Facebook’s Sheryl
Sandberg 7/1 and former Microsoft executive Steve Sinofsky 12/1.
Nokia’s chairman, Risto Siilasmaa,
admitted that the Finnish company’s effective exit from the mobile phone
business it pioneered was an “emotional” decision but made financial
and strategic sense.
He said it lacked the resources to
properly promote its Lumia smartphones, which use Microsoft’s Windows
Phone operating system, in a sector dominated by the Apple iPhone and
handsets running Google’s Android software, particularly Samsung’s
Galaxy range.
He said: “The industry is becoming a
duopoly with the leaders building significant financial momentum. Nokia
alone doesn’t have the resources to fund the required acceleration.”
The struggles of Nokia’s mobile phone
business, which accounted for around half the group’s revenues last
year, have weighed heavily on profits. In the first half of this year,
underlying margin was 4pc, it said, but would have been 12pc without
having to battle in the fiercely competitive sector.
The company’s shares were up more than 40pc following the announcement this morning.
Nokia’s chief financial officer Timo
Ihamuotila said: “Rationally, this transaction is the right step but
emotionally this transaction is more complex.”
When the introduction of the iPhone
sparked the mobile internet revolution in 2007, Nokia was the biggest
mobile phone maker. It has since ceded that position to Samsung and its
share of the crucial smartphone sector has dwindled from nearly 50pc to
3pc in the first half of this year, according to the industry analysts
Gartner.
-telegraph.co.uk
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