Microsoft to acquire Nokia's handset business

The deal is expected to close in the first quarter of 2014, subject to approval by Nokia shareholders.

Nokia handset. Picture: AFP

SEATTLE - Microsoft Corp said it would buy Nokia Oyj's phone business and license its patents for 5.44 billion euros, making its boldest foray yet into mobile devices and bringing executive Stephen Elop back into the fold.

Nokia chief Elop, a former Microsoft executive, will return as Microsoft's board ponders a successor to current CEO Steve Ballmer, who will depart sometime in the next 12 months after initiating a reorganization intended to transform the software company into a devices and services group in the mould of Apple Inc.

The sale of Nokia's phone business marks the exit of a 150-year-old company that once dominated the global cellphone market and remains one of Europe's premier technology brands, even though Apple and Samsung Electronics' ascendancy all but reduced it to irrelevancy in Asia and North America in recent years.

The sale price of the phone business, at about one-quarter of its sales last year, represented a "fire sale level," according to analyst Tero Kuittinen at consultancy Alekstra, although others disagreed on pricing.

Nokia - reduced to its networks business, navigation offerings and patent portfolio after the sale - is still the world's No. 2 mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.

Sales of Nokia's Lumia series have helped the market share of Windows Phones in the global smartphone market climb to 3.3 percent, according to consultancy Gartner, overtaking ailing BlackBerry Ltd for the first time this year.

Canadian Elop, hired from Microsoft in 2010, has been cited among the frontrunners to take over from Ballmer, criticised for missing the mobile revolution, kicking off Microsoft's foray into the market with the tepid-selling Surface tablet only in 2012.

Buying Nokia's gadget business thrusts Microsoft deeper into the hotly contested market, despite some investors urging the company to stick to its core strengths of business software and services.

"It's a bold step into the future - a win-win for employees, shareholders and consumers of both companies," Ballmer said in a statement.

Nokia said in a statement it expected that, apart from Elop, senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would transfer to Microsoft when the deal is concluded. It did not say what roles they would take there.