MICROSOFT ACQUISITION OF

NOKIA

• Ma. Fatima Cajucom

• Jerome Dizon
• Joanna Llesis
• Elisa Panlilio
• Irem Poyos
Purpose of the study
• To understand the concept of Merger and Acquisitions and its
implications on strategy, technology, marketing, and financial
intents, IP acquisitions and licenses
• To understand the role of PESTEL factors and SWOT
analysis in strategic decision making

• To understand financial implications of the strategy on a

business by discussing financial
MICROSOFT BACKGROUND
• Founded by Bill Gates and Paul Allen in April 4th 1975
• The word Microsoft was first used by Gates on the 29th of July 1975. A
portmanteau of “microcomputer”and “software”, which was registered
with the New Mexico secretary of state on Nov 26, 1976
• Microsoft’s big break was back in 1980, when a partnership with IBM
was formed.
• Microsoft is a unicorn in the office productivity software and desktop
operating system.
• Hugely lagging behind in the mobile OS ecosystem, re-entering the
mobile ecosystem is a tough task as Google’s Android and Apple’s iOS
has taken the market by storm
NOKIA BACKGROUND
• Nokia operated in major business segments namely–Smart
Devices and Service, HERE (formerly NAVTEQ)and Nokia
Siemens Network
• Post 2008, Nokia’s product lines were shattered in the
fierce competition, and its market share began to drop
rapidly. Symbian”, an Operating System (OS) which was
considered obsolete as compared to the modern
counterparts such as iPhone OS (iOS) and Android
MERGER AND ACQUISITION
Mergers and acquisitions (M&A) is a general term that
describes the consolidation of companies or assets through
various types of financial transactions, including mergers,
acquisitions, consolidations, tender offers, purchase of assets,
and management acquisitions.
MERGER AND ACQUISITION
Strategic Expectation of Microsoft
1. Improving market share
2. Uniting hardware and software
3. Benefitting from patents and royalties
4. Strengthening its stance in tablet industry

Financial Expectation of Microsoft

1. A much better profit per unit
2. Impact on EPS
MERGER AND ACQUISITION
Strategic Expectation of Nokia
1. Establish its foothold in North America
2. Focus on its businesses of making cellular networking equipment

Financial Expectation of Nokia

1. Increase the revenue generation from Nokia’s mobile devices segment
2. Expected a sale of 53.7 million units in the quarter following the merger
3. Moment of reinvention and build next chapter
4. Funding of 1.5 billion Euros from Microsoft in forms of convertible notes
FINDINGS AND DISCUSSIONS
1. Microsoft and Nokia focused on the complementary advantages
without analyzing the reasons behind their individual failures in the
past.

2. The deal encompassed poor implementation of the strategic vision,

political and legal hurdles, technological incompetence as well as
social and economic repercussions
3. The new markets lacked well-defined laws for the protection of
intellectual property in terms of enforcement of copyright,
trademark, trade secret, and other protections that apply to
software and hardware products, services, business plans and
branding.
FINDINGS AND DISCUSSIONS
4. Nokia and Microsoft did not fully utilize each other’s core
competencies (Nokia-Hardware and Microsoft-Software) and
emerged as a tough competitor to other players.
5. Failed integration and overestimating synergies between merging
companies.
6. Marketing and Branding Issues
CONCLUSIONS
• Microsoft entered the mobile industry too late.

• Developers are hesitant to invest in a platform without a large user

base, and consumers are hesitant to buy devices unless they can offer
a minimum number of popular apps. Apple iOS and Google Android
were the platforms of choice for developers.

• Microsoft intended to sell Windows-based phones in emerging

nations where Nokia had a strong presence, while device companies
such as Xiaomi, Huawei, and others sold cheap Android-based
phones.
CONCLUSIONS
• Google’s android earned the market for cheap and mid range mobile
phones. On the other hand, Apple was known as a quality leader.
Microsoft was unable to compete on either price or quality.

• Microsoft's CEO has been replaced by Satya Nadella, who has a

different approach and believes that Microsoft should not be a phone
maker.
RECOMMENDATIONS
• Establish integration task groups made up of key individuals from each of
the combining organizations to monitor the synergy and implementation of
the vision.
• Manifest a proper communication of all aspects of merger or acquisition
from top management to the employees

• Planning and forecasting is an important consideration for merging

companies.
• Set-up a quality selection process for restaffing in order to identify the best
candidate for the new position.
RECOMMENDATIONS
• Consult firms with vast experiences on mergers and acquisitions to
facilitate transition and ensures all aspects were accounted and planned
• Highlight and give emphasis on core business and maintain good market
orientation during transition

• Established benchmarking measures on competitors and non competitors

and adapt industry best practices

• Bridge cultural and work ethics differences of the merging companies to

promote synergies between the employees
• Ensure proper transition between the two merging companies. Maintain the
key officials and ensure to carry out transition plans to properly coordinate the
purpose of the merger.
Implementation
• Forward Plans for Microsoft and Nokia
oMicrosoft and Nokia may bring into the market a powerful
combination of low-cost, secure, functional smartphones.

• Due Diligence Review

oThis is usually conducted by an independent consulting team.
 Thank You!

• Ma. Fatima Cajucom

• Jerome Dizon
• Joana Llessis
• Elisa Panlilio
• Irem Poyos