The stockholders seemed to be satisfied by Steve Ballmer’s resignation as CEO of Microsoft, but nothing is ever certain when you are holding Microsoft’s stocks. Even though one of the worst CEOs of the last years has resigned, this company has decided to make another bad move in order to follow the trend of the last years. That’s why they have announced the acquisition all of “Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services”.
Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase all of Nokia’s Devices & Services business and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.
The boards of both companies have decided to enter into this transaction. From this deal, Microsoft is trying to make a bigger impact in the mobile market, where the Redmond company has already failed. There is no space for another operating system, such as that of Microsoft’s, nor for Nokia, which has been losing momentum in the last few years. The directors however still haven’t seen this point.
On the other hand, investors haven’t taken this decision in the right way. That’s why they have started selling their stocks, causing a 5% drop for Microsoft. At the same time, Nokia’s investors seemed content with this acquisition. In other words, nothing has changed. Two companies, which have been failing, have joined their efforts to fail and die forever.
Now the biggest concern is about who is going to lead Microsoft, because at the moment, the board of directors haven’t expressed their opinion yet. Nevertheless, there are rumours that might see Nokia’s former CEO, Stephen Elop as a good candidate for the role. In the meantime, after the acquisition Elop will return to Microsoft as head of its devices team, which could be considered the first step to becoming the next CEO.
As we have already said, a manager such as Stephen Elop, could be the end of Microsoft, which desperately needs to find people who understand what innovation means. Instead of looking for bright and young minds, they seeking old and experienced managers, who don’t know what they are talking about given their previous experiences in destroying companies such as Nokia.
There is still time to learn how to pivot and look for innovation, by building a new generation of developers and forming a culture. Microsoft needs to become a startup once again in order to be the most competitive company in the market.