Those who have been following Microsoft’s acquisition of Nokia’s mobile operations closely should remember that the deal’s closing has been delayed somewhat. Indeed, news broke last month that the acquisition, expected to close during the first quarter, wasn’t going to do so until April. Well, it’s April and so it shouldn’t be surprising that Nokia’s mobile business is now officially Microsoft’s.
The acquisition was first announced in September of last year, at which time Microsoft announced it would spend $7.2 billion — a price which has apparently risen slightly due to “purchase adjustments relating to net working capital and cash earnings” — on what was once Nokia’s mightiest division. As the deal neared closing, however, a few factors stood in the way.
Namely, approval of the deal was delayed in China where Google and Samsung stalled by asking local authorities to consider how it could impact patent licensing fees. India was another sticking point for the acquisition as one of Nokia’s factories there experienced some tax-related issues.
In fact, this tax conflict was unable to be resolved in time. As a result, Nokia will keep a factory in Chennai that employs 8,000 and turns out millions of handsets every year up and running. The factory has been frozen by Indian authorities following allegations that Nokia “wrongfully claimed tax exemptions on software exports,” according to The Wall Street Journal. Still, this factory will technically be in service of Microsoft going forward as Nokia has entered into a service agreement to produce phones for the software giant as a contract manufacturer.
As for Microsoft, this marks perhaps the boldest step toward hardware manufacturing in the company’s history. The company isn’t new to the area, of course — think Xbox and the Surface line of tablets — but managing the sheer variety of Windows Phone handsets Nokia tends to release is definitely a new direction for Microsoft.
Edited by
Stefania Viscusi
