Assignment Writing Service http://StudyHub.vip/Acquisition-Of-Nokia-By-Microsoft 👈

1. i | P a g e
Acquisition of Nokia by Microsoft

2. ii | P a g e
Term Paper
Mergers and Acquisition
FIN 3202
Prepared by,
Rashid Mahruf (17221005)
Ekhtear Ahmed (17221039)
Md. Mostafa Asef Rafi (17221041)
Mayisha Tasnim Natasha (17221081)
Fakhruddin Ahmed (17221093)
Batch: 2 (2017)
Section: A
Department of Business Administration in Finance and Banking
Supervised by,
Md. Ahasan Uddin
Assistant Professor
Department of Accounting & Information Systems
FBS, University of Dhaka
Date of submission: October 10, 2019

3. iii | P a g e
Letter of Transmittal
10 October, 2019
Md. Ahasan Uddin
Assistant Professor,
Department of Accounting & Information Systems
FBS, University of Dhaka
Subject: Submission of the term paper report on the topic “Acquisition of Nokia by
Microsoft”.
Sir,
With due respect we are reporting you the term paper related to the example of company’s
acquisition of another company. So, we have selected the topic ‘Acquisition of Nokia by
Microsoft’ for the course ‘Mergers and Acquisition’ (FIN-3202). We have tried our best to
do the research properly considering every trifle thing you advised and make the report in
a fascinating way.
We, therefore, eagerly believe that this term paper report will meet your specification and
contentment.
Sincerely,
Rashid Mahruf (17221005)
Ekhtear Ahmed (17221039)
Md. Mostafa Asef Rafi (17221041)
Mayisha Tasnim Natasha (17221081)
Fakhruddin Ahmed (17221093)
Batch-2 (2017)
Section- A
Department of Business Administration in Finance and Banking

4. iv | P a g e
Statement of Authorship
We, hereby, state that the report we are submitting is entirely our authentic work. The report
has not been used other than the stated sources that marked on the reference part which has
been quoted either literally or by content from the used sources. It’s assured that the
contents or parts of it have not been copied from any report. We are aware of the regulations
concerning plagiarism, including those regulations concerning disciplinary actions those
may result in plagiarism. Any use of the work of any other author, in any form, is properly
acknowledged at their point of use.
Students’ Name:
1. Rashid Mahruf
2. Ekhtear Ahmed
3. Md. Mostafa Asef Rafi
4. Mayisha Tasnim Natasha
5. Fakhruddin Ahmed
Date of Submission: October 10, 2019

5. v | P a g e
Acknowledgement
First of all, we would like to thank the almighty Allah for whose kindness we have managed
successfully to complete the term paper report properly and thoroughly with a sound health.
Then, we would like to give the credit to our course teacher Md. Ahasan Uddin. Without
his proper guidance and techniques, it would be tough enough for us to complete the term
paper report in a proper way on time. We are also thanking him for assigning us the related
topic. Actually, this ensured our dexterity enough regarding this area, that in real case
scenario, what was the reason behind this acquisition.
Finally, we would like to thank our friends, seniors and different online sources. Without
helping of them, it was pretty tough to create the pattern and accumulate important
information in the term paper.
Thanks to all of you

6. vi | P a g e
Abstract
A method through which companies are bought, sold, combined or recombined is known
as Mergers and Acquisitions. It is currently growing all over the world as a business
strategy. The objective of modern business is to maximize value through the best utilization
of available resources. As such, companies have to continue creating value to sustain. The
merger and acquisition process begin by giving due consideration to the key factors, such
as profitability of entering a new market through business expansion, revenue generation,
cost reduction, etc. Thereafter, it is crucial to consider both the seller and the buyer
perspectives, and the regulatory requirements followed by the letter of intent. If everything
seems right, the company should proceed towards making the deal, going through stages
such as structuring the deal, valuation, pricing and financing the merging of the companies.
The purpose of this paper is to illustrate the acquisition of Nokia by Microsoft and identify
the impact on both companies by this acquisition. Theoretical analysis and numerical
analysis will be conducted to find substantial results on this research paper. Data has been
collected from secondary data source. To develop the theoretical background of the study
and numerical evidences, secondary data were collected from economic reviews, journals
and different websites. The financial data was collected in order to present a summary of
the financial position of the company.

7. vii | P a g e
Table of Contents
Chapter One Introduction...........................................................................................................1
1.1: Overview of The Topic........................................................................................................1
1.2: Familiarization of The Firms .............................................................................................1
1.3: Justification of The Report.................................................................................................2
1.4: Objective of The Research..................................................................................................2
Chapter Two Literature Review ...................................................................................................3
2.1: Pre-acquisition Situation Analysis.....................................................................................3
2.2: Post-acquisition Situation Analysis ...................................................................................5
Chapter Three Methodology of The Research.............................................................................7
3.1: Type of The Research .........................................................................................................7
3.2: Data Source..........................................................................................................................7
Chapter Four Findings and Analysis...........................................................................................8
4.1: Motives Behind the Acquisition.........................................................................................8
4.2: Benefits and Prospects of the Acquisition.........................................................................9
4.3: Payment for the Acquisition.............................................................................................10
4.4: Weaknesses of The Firm Being Acquired.......................................................................10
4.5: Business Model Followed by Microsoft...........................................................................11
4.6: Rationale Behind the Acquisition ....................................................................................11
4.7: Involvement of Risk and Relevant Reward ....................................................................12
4.8: Research and Development Issues and Future Prospects .............................................13
Chapter Five Conclusion ............................................................................................................14
5.1: Gist and Recommendation ...............................................................................................14
5.2: Limitations of the Study ...................................................................................................14
References .....................................................................................................................................15

8. 1 | P a g e
Chapter One
Introduction
1.1: Overview of The Topic
This report has been prepared on the topic based on a company’s acquisition by another
company. In this report, two companies have been chosen. The giants are Microsoft and
Nokia. However, this report is basically an in-depth discussion on ‘Acquisition of Nokia
by Microsoft’. The following contents are being covered in this report which are considered
as main focus in this report.
o Industry sector from which the two companies belong to
o Whether the acquisition is made within the industry or other industry
o Motives behind this acquisition
o Percentage of acquisition and the way of payments for this acquisition
o Weaknesses of the company acquired by the other one
o The company’s overall operational and financial policy after acquisition
o Policy regarding the preparation of consolidated financial statements
o Risk and reward involved in the process of acquisition or after the acquisition
1.2: Familiarization of The Firms
1.2.1 Microsoft: Microsoft Corporation is an American multinational technology company
which develops, manufactures, licenses, supports and sells computer software, consumer
electronics, personal computers and services. Its renowned software products are the
Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet
Explorer browsers. It was founded on April 4, 1975, in New Mexico of US by Bill Gates
and Paul Allen. Its net annual income was 21.2 Billion USD on the period 2017. Currently
it’s dealing with the products like MS Office, Skype, Internet Explorer, NETBREEZE,
Nokia etc.
1.2.2 Nokia: It’s a Finnish multinational communications, information technology and
consumer electronics company which was founded mainly in 1865 with a headquarter in
Helsinki. It was founded as a pulp mill company and had long been associated with rubber

9. 2 | P a g e
and cables. In 1990, it focused on large-scale telecommunications infrastructures and
technology development. The company viewed with national pride by Finns, since its
successful mobile phone business made it by far the largest worldwide company and brand
from Finland. At its peak in 2000, during the telecoms bubble, Nokia alone accounted for
4% of the country's GDP, 21% of total exports and 70% of the Helsinki Stock Exchange
market capital.
1.3: Justification of The Report
As the authors of this report, all of them are doing their under-graduation having major in
Finance and Banking and being a learner of this subject, like other courses, Mergers and
Acquisition course is also an important course in this respected area. It’s very much
important to know every detail knowledge regarding the course. To get field knowledge
it’s necessary to know about the factors and every detail that how the acquisition actually
happens, what are the criteria, what are the things need to be taken into consideration while
a company is acquiring another or in case of mergers how the things work etc.
1.4: Objective of The Research
o To study the motives of acquisition of Nokia by Microsoft
o To analyze the pre-acquisition and post-acquisition phase of the firm
o To do the situation analysis caused by this acquisition
o Exploration of intention behind this acquisition

10. 3 | P a g e
Chapter Two
Literature Review
In the recent era, the strategy of unit and rule is more followed than divide and rule, mostly
in the present business scenarios those are mainly gargantuan companies. Nowadays, the
companies are coming together to join themselves, so that the resources could be allocated
and utilized to the optimum level (Anderson, Havila, and Nilsson, 2012). In merger or
acquisition contract, two or more companies are consolidated to bring into existence with
a single entity. The strategies can be quite handy for the companies operating in the same
sector of industry to get competitive benefits. To fulfil the requirements of the report as
well as the objective of the report, a deep study was done regarding the topic. And this
helped to explore numerous things behind the acquisition or merger of the firms. After a
deep study, the key facts those were extracted from the secondary sources are as follow:
o Pre-acquisition situation of Microsoft and Nokia
o Post-acquisition situation of Microsoft and Nokia
2.1: Pre-acquisition Situation Analysis
It’s regularly found in the merger and acquisition bargains that the purchaser pays premium
or additional charge well beyond the estimation of net resources obtained in a merger
bargain. This premium or additional charge is paid for synergy picks up that the purchaser
hopes to procure out from that merger bargain (Karenfort, 2011). In this manner, synergy
can be surmised to be the extra worth made because of joining the activities of the two
organizations together. The synergy made by the merger could be money related and
additionally working (Gaughan, 2013). The money related cooperative energy is showed
in the expanded obligation limit, improvement in the liquidity, tax reductions, and
improved generally budgetary execution of the subsequent organization after merger. Then
again, working synergy is showed in the economies of scale, diminished challenge, and
upgraded altruism in the market (Gaughan, 2013). On account of Microsoft and Nokia
merger, the assessment of synergy has been made by examining the budgetary presentation
of the Microsoft and Nokia pre-merger. The statistical data points for pre securing period
that identify with the period before the year 2014 have been investigated as underneath:

11. 4 | P a g e
In million dollars
Year 2010 2011 2012 2013 Average
Revenue 62,484.00 69,943.00 73,273.00 77,849.00 70,999.75
Operational
Cost
12,395.00 15,577.00 17,530.00 20,249.00 16437,75
Gross
Margin
50,089.00 54,366.00 56,193.00 57,600.00 54,562.00
Gross
Margin Ratio
80.16% 77.73% 76.22% 73.99% 77.03%
Net Margin 18,760.00 28,071.00 22,267.00 21,863.00 22740.25
Net Margin
Ratio
30.02% 40.13% 30.20% 28.08% 32.11%
EPS 2.13 2.73 2.02 2.61 2.37
From the data presented in the table-1, it could be observed that the company was
maintaining an average gross profit ratio of 77.03%. The revenues of the company were
growing at a steady pace. The average revenues earned by the company in the period of
four years from 2010 to 2013 amounted to $70,999.50 million (Table-1). Further, the
company was making healthy profit margins at a percentage of 32.11%.
In million dollars
Year 2010 2011 2012 2013 Average
Revenue 56,364.04 53,844.25 38,809.25 16,681.37 41,424.73
Operational
Cost
39344.34 38079.15 28018.97 9781.602 28806.02
Gross
Margin
17,019.70 15,765.80 10,790.38 7,099.77 12,668.41
Gross
Margin
Ratio
31.56% 28.14% 28.85% 42.06% 32.65%
Net Margin 12,810.009 -23,615.90 -3,191.55 -3,446.56 -7,243.25

12. 5 | P a g e
Net Margin
Ratio
4.40% -2.28% -12.16% -4.84% -3.72%
EPS 0.68 -0.41 -1.11 -0.23 -0.27
Whereas in case of Nokia, it is seen that the company’s gross margin ratio was maintained
at a level of 32.65%. But, the revenue of the company was decreasing drastically. The
average revenue earned by the company was $41,424.73. Moreover, the profit margins of
the company worsened from 2010 to 2013 as the net margin of the company worsened
drastically. The average net margin was -3.72%.
2.2: Post-acquisition Situation Analysis
The performance of Microsoft and Nokia after acquisition process has been made by
examining their financial statements of 2014-15.
In million dollars
Year 2014 2015 Average
Revenue 86,833.00 93,580.00 90,206.50
Cost of operations 27,078.00 33,038.00 30,058.00
Gross margin 59,755.00 60,542.00 60,148.50
Gross margin ratio 68.82% 64.70% 66.76%
Net margin 22,074.00 12,193.00 12,133.50
Net margin ratio 25.42% 13.03% 19.23%
EPS 2.66 1.49 2.08
After the acquisition of the Nokia’s assets, there was observed a downfall in the company’s
profitability. The gross profit margin reduced from 73.99% in the year 2013 to 68.82% in
the year 2014 and it further went down in the year 2015 to 64.70%. It may be noted that
the company was able to increase its sales after acquiring the assets from Nokia in the year
2013. The sales revenues increased from $77,849 million in the year 2013 to $93,580
million in the year 2015. Though, the company achieved growth in the revenues, but the
gross margins went down, which indicates increase in the cost of operations. The increase
in the cost of operations is a clear indication that the company did not receive economies
of scale from the acquisition of Nokia’s assets. Thus, there was no operational and/or

13. 6 | P a g e
financial synergy for Microsoft from the acquisition of the assets from Nokia. The
company’s profitability was affected adversely from this merger deal, which is evident
from the deterioration in the net margin. As against the average net profit margin of 32.11%
in the four years preceding the acquisition, the company could maintain only 19.23% net
margin in the two years after the acquisition. Further, the ESP of the company was down
to $1.49 in the year 2015 from as high as $2.61 in the year 2013. Considering the bad
financial performance in the post-acquisition period, the company admitted that the merger
deal with Nokia was the biggest failure.
In million dollars
Year 2014 2015 Average
Revenue 16924.65 13878.89 15401.77
Cost of operations 9430.055 7823.88 8626.97
Gross margin 7494.59 6055.011 6774.80
Gross margin ratio 44.28% 43.63% 43.96%
Net margin 5975.17 7027.86 6501.52
Net margin ratio 27.19% 19.73% 23.46%
EPS 1.13 0.70 0.92
On the other hand, in case of Nokia there has been no fruitful financial development.
Rather, the revenue began to deteriorate which sloped down to an average of $ 15,401.77.
The gross margin rate, EPS began to slope down. So, it is seen that after acquisition there
has been no fruitful development for Nokia both operationally and financially.
So, apart from these, a lot of things is being found out those are directly or indirectly related
to the acquisition process and how those are significantly obsessing

14. 7 | P a g e
Chapter Three
Methodology of The Research
3.1: Type of The Research
The research is empirical in nature. Theoretical analysis and numerical analysis supported
by evidences has been used to substantiate the findings of the paper. Data has been
presented in the simple and logical form.
3.2: Data Source
Data has been collected from secondary data source. To develop the theoretical background
of the study and numerical evidences, secondary data were collected from economic
reviews, journals and different websites. Numerical secondary data of regarding several
components have been taken into consideration from different economic review. Through
the website, most of the information about the company and its activity was possible to
attain. The financial data was collected in order to present a summary of the financial
position of the company. But, in order to get depth information, about qualitative research,
the help of many secondary sources was taken.

15. 8 | P a g e
Chapter Four
Findings and Analysis
Microsoft and Nokia, both of the firms belong to the same industry which is basically
technology based. Microsoft deals with different types of software or application like
Microsoft Office, Yammer, Storsimple, Microsoft Dynamics, NETBREEZE, Windows
Phone, Silverlight etc. On the other hand, Nokia is all about cell-phones. Different types of
cellular phones with different features it launched to the market. Here, when Microsoft
acquired Nokia, the result of this acquisition became a vertical merger. Since both of the
firms are tech-based, still the products of the firms are different to each other and then the
acquisition held. After a deep study regarding the topic, a lot of question arose and those
are covered in this chapter as following.
4.1: Motives Behind the Acquisition
Microsoft procured Nokia by forking out $ 7.2 billion where all installment was done in
real money exchange and which was shut in first quarter on 2014.This move is an endeavor
by Microsoft to make administration in software market. Arrangement will offer
advantages to the two gatherings as they will share qualities of the two organizations and
will cooperate for gathering business sector needs and to get a handle on the gap in the
market. The other reasons why Microsoft buyout Nokia are as follows:
o To compete better with Android & IOS and also to take full control of its
smartphone destiny.
o Microsoft acquires Nokia’s patents, IP licenses and Nokia HERE mapping
technology.
o To support Ballmer’s (CEO Microsoft) new devices and services strategy for the
Microsoft.
o The deal will bring 32000 employees of Nokia on board to Microsoft. It will change
Microsoft into a true multinational company with all the tax flexibility.
o Microsoft will be in a profitable position due to the acquisition as transaction and
unit cost declined with a larger global distribution and Supply Chain.
o With the vertical unification Microsoft acquires supply chain of Nokia and its array
of mobile devices.
o With acquisition Microsoft controls all modes of production. As transaction costs

16. 9 | P a g e
are decrease so will unit costs.
o The deal will protect Widows Phone platform future and will make it or may make
it more competitive and can give impetus to innovation.
o Microsoft made less than $10 from every Windows phone unit sold before
acquisition, after acquisition the number may go up.
o It will help Microsoft to make more money per handset, less redundant marketing
efforts and access to the source code for Nokia's mapping software. But if App
Ecosystem is not improved by Microsoft it will be a naught.
4.2: Benefits and Prospects of the Acquisition
From the post obtaining budget summary examination it was seen that the securing was a
disappointment for both the companies. It didn't bring any great outcome for the
organizations rather the organizations needed to confront some losses. As an outcome
Microsoft discounted $ 7.6 billion of Nokia procurement. The organization couldn't benefit
from this merger bargain because of nonattendance of lucidity in the destinations of
procurement and post-obtaining reconciliation plan. In spite of the fact that this merger
bargains the organization attempted to go into the new market leaving its center field tasks
unfocused. Further, post disclosures of the disappointment of merger, it was seen that need
lucidity of procurement purposes and satisfactory getting ready for coordination were
additionally the explanations behind disappointment of the merger. The merger and
obtaining choices are delicate to the market; thusly, the administration ought to be wary in
drawing out such choices. Setting up a nitty gritty merger plan including examination of
things to come pattern is an essential to go for merger and obtaining bargain. In the present
case, Microsoft couldn't break down the future pattern of portable industry suitably, which
caused disappointment of the organization's merger with Nokia. The budgetary
presentation began influencing unfavorably when the organization procured resources from
Nokia. If there should arise an occurrence of Nokia, the purpose behind disappointment
was the organization was losing cash. As an outcome the board of Nokia lost their
confidence over the strategies of Microsoft. For these reasons, this acquisition was one of
the greatest failures in mergers and acquisition of telecommunication industry.

17. 10 | P a g e
4.3: Payment for the Acquisition
Nokia provided annual financial reports by using International Financial Reporting
Standard whereas Microsoft reported the statements by using Generally Accepted
Accounting Principles. Differences in national culture combined with different reporting
requirements create accounting and financial cultural differences. These differences lead to
financial reporting misunderstanding and possible valuation problems. According to a
consensus, Microsoft paid to much for a company that had not been profitable for several
years.
One of the reasons is that Microsoft was in a scary position in the market. It was feeling
pressure from Apple, Samsung and feared being left behind. To compete in the market,
Microsoft was left with the choice to build a mobile phone unit from scratch or acquired a
well-stablished company. Microsoft take the choice to own one of the stablished firms. So,
Microsoft entered into an agreement that it would pay EUR 3.79 Billion to buy substantially
all of the devices of Nokia’s and services as well. And EUR 1.65 Billion to license Nokia’s
patents, for a total transaction price of EUR 5.44 Billion in cash.
4.4: Weaknesses of The Firm Being Acquired
o Operating system and apps: These were comparatively less powerful and space was
also lower than that of others. Ciol (2013) reported, “Operating system space was
nearly occupied by Android and iOS and Window operating system does not have
much role”.
o Politics of mid-level management: Middle management of any firm plays a vital
role in sustaining the growth in all categories. However, Nokia mid-level
management was very much publicized. It was focusing more on internal
competition and their personal interest. The phenomenon of co-operation was
missing at mid-level (DOMINIES COMMUNICATE, 2013).
o Nokia itself failed in the race with Samsung: Nokia could not market itself as
innovator in the market (CHANG, 2012; CIOL, 2012). The price of Nokia phones
has been higher than Samsung phones. In addition, Samsung has the capacity to
launch new models in every 40 days while Nokia has very limited capacity of
introducing new models (FUNDEY.COM, 2012).
o Hurt on the lower end and also by local vendors: Nokia did not anticipated
competition in the lower end of the market. Its competitors such as HTC, Huawei

18. 11 | P a g e
and ZTE, competed better in low-end emerging markets like China (CHANG,
2102). Similarly, in dual SIM emerging market of India where in Nokia could not
compete with local vendors such Micromax, Haier, Spice Mobiles, Maxx Mobiles
etc; due to its arrogance (LOBO, 2011). The story was a repeat of dual SIM card
phones in other countries such as Russia. Nokia was slow to react (MURTAZIN,
2011).
o Android paid off (for Samsung) and Windows Phone Hasn’t (yet for Nokia):
Samsung bet on multiple platforms (Android, Windows Phone, and homegrown
OS, Bada). Android paid off handsomely. Samsung chose Android at the right time.
Nokia, spent time on Symbian. Its partnership with Microsoft was too late from
business perspective (CHANG, 2012).
4.5: Business Model Followed by Microsoft
Microsoft business model is similar to Apple and Samsung. It has an OS basket, and other
tools such as Skype & Lync that depend on open integration of smart device which none
of the competitors have in the domain (EDHOLM, 2013). He added further, that Microsoft
has been out-flanked for two of the cloud pillars, search and social. In addition, Microsoft
has a reasonable position in the gaming pillar (Xbox Live) but it has minimal positions in
entertainment (Netflix, Amazon Prime, MSOs). It means, Microsoft's strength is in
communications and productivity apps (Office 365). Still it has gaps. Nokia is the
beginning of strategy which has filled the gap in the hardware segment. It also needs the
client business the way Samsung and Apple do. In Microsoft environment its client partners
are suffering. Even Nokia is an example. Window OS has failed to bailout it. After filling
the gaps Microsoft may emerge with a better business model.
4.6: Rationale Behind the Acquisition
Microsoft has suffered similar problems to Nokia, it once held monopolist control over the
PC market, and its operating systems are still ubiquitous. Despite strong revenues from its
Windows OS, Office suite of business software and Xbox game console, the company’s
mobile phone unit and tablets have not been successful. The trends show that the
technology evolution has made the computers ubiquitous and soon will transform
computing to purely mobile from the traditional. If Microsoft had to align with the current
trends, it needed strong devices knowledge as well as market share. Microsoft saw a chance
of that in Nokia and strategically decided to consider a buyout. Nokia has traditionally been

19. 12 | P a g e
good at mobile handset designs and technology till it lost the battle of OS to android which
changed the mobile market scenario.
4.7: Involvement of Risk and Relevant Reward
4.7.1: Microsoft’s Unsuccessful Stint in Mobile Devices
Microsoft has enjoyed a considerable success in the desktop and business software industry,
and has consistently grown its revenues. However, the desktop market is declining, which
has made the company think seriously about its long-term future. The explosive growth of
the tablet and smartphone market is something the company attempted to capitalize on, but
unfortunately it has not been able to quite compete with the likes of Apple and Samsung in
the mobile devices design. A table on worldwide device shipments by segments (in ’000)
is as following:
4.7.2: Vertical Integration may Improve the Profit Margin
Microsoft’s stint in mobile phones has been mostly unsuccessful and with the newly
acquired Nokia’s 32,000 staff, the company hopes to be able to focus the resources on tablet
and phone production. The company thinks that the elimination of Nokia’s development
and marketing costs would bump the average profit per unit up from less than $10 to $40.
It will also have complete control over the product, allowing it to shape it as it wishes. By
integrating a manufacturer into the fold, Windows will have a similar offering to Apple in
both hardware and software designed together. Nokia will assist tablet manufacturing too.
Nokia’s experience will not only come into play with the smartphones, but also tablets. The
Nokia Lumia 2520 is a tablet, and will help to compete over different price ranges compared
to the expensive Surface. There is also space to exploit “phablets”, a product somewhere
between a phone and a tablet. There is also an advantage for corporate owners, adopting

20. 13 | P a g e
BlackBerry style abilities to administer a fleet of Windows Phones easily. Blackberry’s
current difficulties represent an opportunity for Microsoft to exploit the market for
corporate phones, a potentially lucrative business area. Vertically integrating and providing
complete solution with presence in the whole value chain will help Microsoft reduce cost
as well as capture the high segment which requires security as well as service and trust
which an android platform may not be able to deliver.
4.8: Research and Development Issues and Future Prospects
o Microsoft got around 8,500 design patents and rights to the Asha and Lumia brands,
as well as a 10-year license to use the Nokia brand on feature phones. Nokia retained
ownership of some of the most valuable utility patents in the wireless industry.
Microsoft didn’t buy those patents, but it licensed them for 10 years, giving
Microsoft free arena that other rival phone makers would not have.
o Through this deal, Microsoft has gained a deeper store of research knowledge
through Nokia’s huge spent on R&D. All R&D Staff related to mobile products and
smartphones is going to be transferred to Microsoft. This will help Microsoft in
leveraging the R&D for the manufacturing of innovative products in mobile
segment.
o Microsoft has to compete with low cost manufactures (Chinese mobiles) but it can
use Nokia’s international manufacturing and distribution for its advantage in future.
o Microsoft acquired the Morph Concept of Nokia which is a research and
development for flexible device bodies and nanotechnology. Nokia’s innovation
can help Microsoft in making Windows Phone OS more developed and innovative.

21. 14 | P a g e
Chapter Five
Conclusion
5.1: Gist and Recommendation
Nowadays even though merger and acquisition are prime strategy for bigger companies, it
didn’t bring expected outcome in case of acquisition of Nokia by Microsoft. Instead both
companies faced loss because of this acquisition. This shows that, even though according
to theory, merger and acquisition can be very beneficial for companies, many times even
big companies faced failures regarding this. Merger and acquisition come in all shapes and
sizes, and investors need to consider the complex issues involved in this. The most
beneficial form of equity structure involves a complete analysis of the costs and benefits
associated with the deals. If companies can create the appropriate structure then it’s
possible to utilize the benefits to a great extent.
5.2: Limitations of the Study
Due to not having quantitative data of all the aspects of the company, qualitative data has
been used to generate findings. Moreover, qualitative data has been used as quantitative
approaches of to generate the appropriate finding and conclude the decision based on the
findings.

22. 15 | P a g e
References
Microsoft to Acquire Nokia’s Devices and Services Business, License Nokia’s Patent and
Mapping Services; Retrieved on October 7, 2019; From
https://news.microsoft.com/2013/09/03/microsoft-to-acquire-nokias-devices-services-
business-license-nokias-patents-and-mapping-
services/?fbclid=IwAR3Bte3_Y72oSa5QA54spoumm_Z3pA_nSCAn5ryS25Nq2rzmez_
d704u_Kg
Microsoft Takes Control of Nokia's Phone Business; Retrieved on October 7, 2019; From
https://www.zdnet.com/article/microsoft-takes-control-of-nokias-phone-business-
acquires-25000-new-employees/?fbclid=IwAR3V9Ipjfcp4E0KintuZpl8YRq_-
jKgw5hzb9nAR-pZ3jYdNrHjNOqzi2Hw
Microsoft Acquires Nokia: Implications for the Two Companies and Finland; Retrieved
on October 7, 2019; From
https://www.researchgate.net/publication/265471945_Microsoft_Acquires_Nokia_Implic
ations_for_the_Two_Companies_and_Finland
Nokia Utilization Plan Revealed by Microsoft’s Leaked Documents; Retrieved on October
7, 2019; From https://www.valuewalk.com/2014/06/nokia-utilization-plan-revealed-by
microsoft/?fbclid=IwAR0cZP8WLDetkrgQ5C115m19wH2ELaWTFYmi7ErobRoK4Sc8
jJ-QBYkZ2Vw
Investing in Tech Stocks: What You Need to Know; Retrieved on October 8, 2019; From
https://www.fool.com/investing/2019/10/06/investing-in-tech-stocks-what-you-need-to-
know.aspx
FOUR REASONS WHY MICROSOFT HAD TO BUY NOKIA; Retrieved on October 8,
2019; From https://www.independent.co.uk/life-style/gadgets-and-tech/features/four-
reasons-why-microsoft-had-to-buy-nokia-
8796638.html?fbclid=IwAR3zBqlg43dfnEqzMFnMiP8zpWnUXrmwyzYLtyyfRvgwyF-
2cxbe2_QTIpE
Case Study Of A Failed M&A— Introduction To Microsoft’s Acquisition Of Nokia;
Retrieved on October 8, 2019; https://internationalhub.org/mergers-
acquisitions/microsoft-nokia-

23. 16 | P a g e
introduction/?fbclid=IwAR3DXTpkFi44bf7B7we2rvxxlOO4J4xrVFS08ZFg02zwOSddN
2mPUaata2c
Nokia: The rise and fall of a mobile giant; Retrieved on October 8, 2019; From
http://www.bbc.com/news/technology-23947212
Nokia and Microsoft sign strategic tie-up; Retrieved on October 8, 2019; From
https://www.theguardian.com/business/2011/feb/11/nokia-microsoft-sign-strategic-tieup
Microsoft to acquire Nokia’s devices & services business, license Nokia’s patents and
mapping services; Retrieved on October 8, 2019; From
https://news.microsoft.com/2013/09/03/microsoft-to-acquire-nokias-devices-services-
business-license-nokias-patents-and-mapping-services/#McupgecLxj1Eyi8M.97
Microsoft hangs up on Nokia business, to cut 7,800 jobs; Retrieved on October 8, 2019;
From http://www.reuters.com/article/us-microsoft-redundancies/microsoft-hangs-up-on-
nokia-business-to-cut-7800-jobs-idUSKCN0PI0GL20150708
Forward Looking Statement: Nokia; Retrieved on October 8, 2019; From
http://www.microsoft.com/investor
AN UNABASHED ANALYSIS AND CRITIQUE OF MICROSOFT'S $7.2 BIL
ACQUISITION OF NOKIA'S DEVICES & SERVICES BUSINESS; Retrieved on
October 8, 2019; From
https://l.facebook.com/l.php?u=https%3A%2F%2Ftommytoy.typepad.com%2Ftommy-
toy-pbt-consultin%2F2013%2F09%2Fmicrosoft-has-justannouncedit-will-buy-most-of-
nokias-devices-and-services-business-for-379-billion-5-billion-and-
w.html%3Ffbclid%3DIwAR2z1HEH8QrKwH9jvvuGQg4PjizchX9C18OhOOR21HlkZA
DrHmpY7piLTi8&h=AT29wq11iwUiR0NvWXpj8YXEyJrA2x6Hp8xb0E8gcqyn4B5da
5TVJq94vFtjfZh3WrpzSdmUUIcLj2wgsz7QGOh2kw33rgTxa_RG2BJHFHE6BM25JQn
mgOXqzmKgcf26e7IF