Earlier at the begining of the month, Microsoft announced its decision to acquire Nokia's mobile phone business for almost $5B, as well as gain access to its patent portfolio for $2.2B. With this transition, Stephen Elop has earned himself a place in the contenders to replace Steve Ballmer as Microsoft's next CEO.
More importantly, Nokia is no longer a phone company but will be left with 3 lines of business. These are
1. Nokia Siemens Network: A telecommunications and network business provider
2. Nokia Here: A mapping and locations based services business acquired as part of Navteq acquisition
3. IP Group: Responsible for licensing and collecting royalties on Intellectual property portfolio built over the years.
Microsoft posted the strategic rationale for the acquisition on its website. This is embedded here.
The combined valuation as per preliminary analysis done by Trefis analysts in their Forbes article is $1.80 above the trading price before the announcement. Already, Nokia has added a little more price on the stock as can be seen from the graphic below.
Only time will tell whether there is more value unlocked here or not.
