Options and Strategies Available to Microsoft and Nokia
Elop has the ready option of calling Microsoft to step in to help the sinking Finnish company. Microsoft may consider to come to the help of Nokia as:
- The Microsoft has the excellent option of entering the cellphone market.
- By helping the Nokia, Microsoft has the option of entering the rich revenue green European market.
- Microsoft may opt to save its annual investment of $1 billion per year in the Lumia.
- The failure of the Microsoft to help Nokia may result in the interference by Google or some other big gun which may snatch the European cellphone manufacturer and the plans of the Microsoft to enter the mobile OS market may fail despite its huge decade-long investments. Analysts are of the view that Windows 8, the recent product of Microsoft in being, is being developed as the future operating system of the mobiles. Nokia may provide a rich target for the Windows 8.
- Microsoft may develop new software for the millions of the existing Nokia clientele in the Afro-Asian-Pacific regions, opening up the new avenues for the Microsoft.
- Microsoft should help Nokia explore the new frontiers of tablet industry or the huge existing clientele of Nokia may, alternatively, decide to move to the Android or Apple’ iOS.
Microsoft Option and the Benefits for the Nokia
- A recent example for the collaboration of Microsoft with other business entities is a strategic partnership of Microsoft and Barnes & Noble. The deal resulted in the inclusion of Nook, the app for the eBooks, in the Windows 8 against the investment of $300 billion for the equity stake of 17.6%, proved to be highly successful. Investors at the NYSE Stock Board approved the move and stock of Barnes & Noble (NYSE: BKS) saw the upward trend of 23.68% within a week. A small investment from $60 billion cash reserve of Microsoft, may prove to be successful not only for the Microsoft but also for the Nokia.
- Investment analysts and bankers are of the view that the $1 billion existing Microsoft support for Nokia may go beyond this figure in case of request from Nokia. This may not result in owning the Nokia but some other financing options, such as loans and/or equity stake, are there for both the companies. Traditionally, Microsoft has kept itself clear of the hardware business as it does not want unnecessary competition with the manufacturers that use its software. So, the higher equity stake in the Nokia which has $12.2 billion worth, is almost out of question, for the time being.
No comments from Microsoft and Nokia are available on this issue.
Other options available for the Nokia to move out of difficulties
There are many pending painful decisions Elop have to take to retain its control as CEO over the one-time history making European giant.
- According to Reuter, Nokia is said to be in talks with private equity firm, the Permira, to sell out its British luxury subsidiary ‘Vertu’ (the maker of the World’s most expensive mobile phones) but this deal may not produce more than few hundred million dollars.
- About the best intellectual property of Nokia in the industry, Elop informed the shareholders on May 3 that at present there were no plans for the wider patent sales.
- He desired to keep the $8.1 billion location and mapping business, acquired from U.S. firm Navteq as a core asset.
- Last year, Nokia tried to sell out half of Nokia Siemens Networks (NSN) but the process collapsed over the issue of pricing.
Analysts are looking at the scenario with interest and waiting or the decision from Elop which would draw the future of the IT industry in Europe.
Elop, Wish you Best of Luck.
Source: Reuter via Yahoo Finance