By Sven Grundberg
HELSINKI-- Nokia Corp.'s mobile phone operation has officially
been transferred to Microsoft Corp., ridding the Finnish company of
a business with legendary status in the telecom industry but that
has suffered a brutal fall from grace in recent years.
The transaction's official closure, announced in a news release
on Friday, puts an end to a long drawn process which started almost
eight months ago, when Microsoft and Nokia first announced the
EUR5.44 billion ($7.52 billion) deal.
In its release, Nokia said there had been some purchase price
adjustments relating to net working capital and cash earnings,
which mean that it expects the total transaction price to be
slightly higher than the earlier-announced price tag of EUR5.44
billion
But Nokia won't quit making phones just yet. Unable to resolve a
long drawn tax conflict in India in time for the deal's completion
deadline, Nokia will keep a massive 8,000-employee factory in
Chennai, the capital of India's Tamil Nadu state, that churns out
millions of handsets annually.
The factory has been frozen by Indian authorities, amid
allegations that Nokia wrongfully claimed tax exceptions on
software exports. Nokia said it has entered a service agreement
whereby it will continue to produce phones for Microsoft as a
contract manufacturer.
Nokia said it plans to offer a support program for employees at
the factory in India, including financial assistance, to help them
pursue jobs outside of Nokia.
For Microsoft, the takeover of Nokia's phone business is a bold
move to improve its odds in the mobile-phone business, where it is
playing catch-up against the likes of Apple, Google and Samsung
Electronics Co.
For Nokia, meanwhile, offloading the unprofitable handset
business leaves it with a mobile network arm that competes with the
likes of Huawei Technologies Co. and Ericsson. It will also hold on
to a digital mapping platform, one of the mobile industry's largest
portfolios of patents and a large pile of cash.
Nokia is expected to announce its new strategic direction, plans
for its cash management and name its next CEO next week in
conjunction with its earnings report due on Tuesday.
Write to Sven Grundberg at sven.grundberg@wsj.com
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