Nokia shares rise but Microsoft sinks 5 percent after $7.2 bn deal

Earlier today Microsoft announced that was buying Nokia’s device business and licenses for Nokia’s patents in a $7.2 billion deal.

Nokia Corp’s shares up were 38 percent to $5.39 in light of the announcement. However Microsoft fell $1.70, or 5.1 percent, to $31.73 after news of the buyout.

Microsoft’s attempt to buy Nokia’s line-up of smartphones and a portfolio of patents and services is part of an attempt to strengthen its fight with Apple Inc and Google Inc to capture a slice of the lucrative smartphone market.

[caption id=“attachment_1082499” align=“alignleft” width=“380”] Microsoft Steve Ballmer is seen in this file photo. Reuters[/caption]

The 5.44 billion euros ($7.2 billion) deal announced late Monday marks a major step in the company’s push to transform itself from a software maker focused on making operating systems and applications for desktop and laptop computers into a more versatile and nimble company that delivers services on any kind of Internet-connected gadget.

“It’s a bold step into the future - a win-win for employees, shareholders and consumers of both companies,” Microsoft CEO Steven Ballmer told reporters at Nokia’s headquarters in Finland Tuesday. “It’s a signature event.”

Microsoft hopes to complete the deal early next year. If that timetable pans out, about 32,000 Nokia employees will transfer to Microsoft, which currently has about 99,000 workers.

The proposed price consists of 3.79 billion euros ($5 billion) for the Nokia unit that makes mobile phones, including its line of Lumia smartphones that run Windows Phone software. Another 1.65 billion euros ($2.2 billion) will be paid for a 10-year license to use Nokia’s patents, with the option to extend it indefinitely.

Investors in Nokia welcomed the deal, sending shares in the company up more than 40 percent to 4.15 euros in Helsinki.

Associated Press