Russian blogger claims to have the world on Steve Ballmer's next acquisition target.

Piers Fawkes, PSFK
  • 16 may 2011

Powered by
This article titled “Rumour mill: Microsoft buying Nokia?” was written by Charles Arthur, for on Monday 16th May 2011 17.35 UTC

A notable rumour going around: Microsoft is going to bid for Nokia, the world’s most prolific maker of mobile handsets, although passed now by Apple for revenue from mobile phones.

The rumour comes courtesy of Russian blogger Eldar Mutazin, who has form: he suggested last year that there were talks going on between Nokia and Microsoft over Windows Phone, at a time when everybody thought Nokia was going to stick rigidly to Symbian – since ditched. He has also been sued by Nokia in July 2010 over the fact that he got some hands-on time with some new Nokia kit – something they were unhappy about. (The lawsuit is a clue.) So clearly he has contacts inside the Finnish company.

He also forecast that Nokia would kill off the Ovi brand (for its online store) – something that the company then went ahead and did on Monday.

Then again, he has also suggested that current chief executive Stephen Elop (ex-Microsoft, if you needed a reminder) will resign at the end of 2012. That stretches our credulity, to be honest, because Elop doesn’t strike us as the sort of person who would leave a job half-finished. And even if he did oversee the sale to Microsoft, to become the new Mobile division, that wouldn’t be the time to give it up.

Nokia’s UK director of communications Mark Squires tweeted that “We typically don’t comment on rumours. But we have to say that Eldar’s rumours are getting obviously less accurate with every passing moment.” This is what you might call a non-denial denial. He’s not saying it’s untrue. He’s just commenting on the general shape of Eldar’s rumours.

So if we assume that this rumour is true, what sort of price might Microsoft be obliged to pay?

Nokia’s current market cap is bn (£19.7bn), and it has fallen from around bn in the days before the Microsoft-Nokia tieup.

Here’s how it looks since the start of the year:

And here’s how it’s fared since 2009:

And here’s the longer view, since 2006:

Microsoft’s cash pile? After that bn Skype acquisition, just bn. Hey, look, same number!

But there would surely be a premium for the mobile division, which is profit-making, unlike the other Nokia divisions – maps business Navteq, which bumps along making small losses (-€62m on €262m revenue in the first quarter, total loss of €225m on revenues of €1bn last year), and phone networks business Nokia Siemens Networks, which makes really quite large losses (-€142m on €3.1bn last quarter, loss of €602m on revenues of €12.6bn last year).

So Navteq makes roughly a -25% return, while NSN makes a -5% return on revenues. But NSN loses bigger.

If Microsoft buys the mobile division, it will have to find a tremendous dowry to pacify the shareholders at Nokia who will be left with two pretty worthless companies – Navteq’s business model is being undercut by Google, which offers maps for free on handsets, and NSN is being chewed up by Huawei and Ericsson. They might try to sell them off, but the reality is that Navteq and NSN are arguably depressing the value of the mobile division, not inflating it. Without them, Nokia could be worth rather more, because at least the mobile division is profit-making and cash-generating.

You’d have to expect therefore that it would be a cash-and-shares deal. But that would require Microsoft to issue more shares, and that will depress its share price even more than it already has, and leads to Microsoft’s shareholders – already used to pain, since they’ve watched the shares go sideways for the best part of a decade – howling even louder. If Steve Ballmer were perceived to make even the slightest misstep, they would be calling it the final straw. Well, you’d hope they would.

Yes, it would make a lot of sense strategically: adding Skype to the largest purveyor of smartphones in the world (24m v Apple’s 18m, though Apple makes more revenue from phones – and so is the world’s biggest phone maker by revenue, though not volume) would be a powerful combination.

What it would also be is a dramatic about-turn from the practice that Microsoft has more-or-less followed since its inception: make software, let others build the software hardware. But it diverted from those with the Xbox (at the urging of J Allard) with success, and then the Zune music player (less successful; interestingly also Allard’s suggestion).

Microsoft as a hardware company? Stranger things have happened – such as Apple coming back from the dead. If it goes ahead, we’ll be watching with fascination. Will the US government let it happen? (Probably.) Would the Finnish government? (Difficult.) The Finnish staff of Nokia? (Very difficult.)

And of course the other thing about this rumour: it’ll never get stale. The Stephens Elop and Ballmer are going to spend a lot of time denying this and having their comments picked over minutely. Just watch. © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.


Turn Food Scraps Into Fertilizer In 24 Hours

Technology Today

Robots Could Be Joining Dubai’s Police Force In 2017

The real-life RoboCops can salute, shake hands and collect traffic fines

Travel Today

Parka Hides And Charges Portable Devices

Bolt is a jacket that lets people carry and charge their various electronics without the need for an outlet


Get PSFK's Related Report: Future of Retail 2017

See All
Food Today

Machine Printer Uses Coffee Drips To Create Intricate Portraits

The Coffee Drop Printer uses a large canvas to design these unique images

Related Expert

Nicolas Roope

Product & Brand Development

Travel Today

Yelp's New 'Yelfie' Feature Lets Diners Take Selfies

The update is designed to encourage people to attach a selfie when they share their experiences

Design & Architecture Today

Build Your Own Savory Cheese Advent Calendar

A British food blogger has created a guide to building a different kind of holiday surprise

Fitness & Sport Today

Floating Gym Concept In Paris Is Powered By Your Workout

The proposed design from Carlo Ratti Associati lets passengers ride a stationary bike as they travel through Paris along the Seine River


Future Of Retail 2017
Transformation Strategies For Customer-First Business

PSFK Op-Ed november 22, 2016

Digital Strategist: Why “Big Sensing” Is Key To Retail’s Future

Bud Caddell, Founder of NOBL, shares why the most capable and useful asset in any retail environment is the workforce

PSFK Labs Yesterday

Retail Spotlight: Home Depot Reimagines How Employees Conduct Tasks

The home improvement retailer puts the customer first by initiating local fulfillment centers and simplifying freight-to-shelf inventory management

Syndicated Today

What Does The Future Of Android Look Like In A World With The Pixel?

Google’s decision to make its own phone might have looked like a blow to the likes of Samsung but the reality is much more interesting

Retail Today

Customer Service Expert: Why Offline Retail Has Better Data Than Online Retail

Healey Cypher, Founder and CEO of Oak Labs, shares why we should be thinking about the physical store as an e-commerce site

Fashion Today

Alexander McQueen Designs A 3D-Printed Umbrella

3D-printed fashion arrives in time for the winter season

Work Today

Why Training Associates To Be Advocates Is Key To Retail Success

In our Future of Retail 2017 report, PSFK Labs discusses strategies to prioritize customer service, which begins with associate advocates

Media & Publishing Today

Netflix Creates Binge Candle To Celebrate A New Season Of Gilmore Girls

The streaming service developed a special layered candle that creates candle with episode-specific smells


Future Of Work
Cultivating The Next Generation Of Leaders

Advertising Today

Interactive Film Tells A Story About Living With Cancer

A moving song written by a father of a cancer patient comes alive in a 3D environment

Automotive Today

Audi And LEGO Exhibit Autonomous Vehicle Installation

The installation at Design Miami explores the 25th hour, which represents bonus productive work or play time

No search results found.