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.
At Nokia's former headquarters, a hulking glass and steel
building outside Helsinki whose lease now will be taken over by
Microsoft, a crane was on standby to remove the Nokia sign, under
which a large blue and white banner read "Nokia moving on."
Employees, who had gathered outside to take photos were
nostalgic. "We've had time to prepare, but it's sad," one of them
said.
Nokia's former Chief Executive Stephen Elop will transfer to
Microsoft where he will oversee Microsoft's hardware business
ranging from mobile devices to Xbox videogame consoles, Microsoft
said in a news release. Mr. Elop will be reporting to Microsoft's
CEO Satya Nadella.
Microsoft also said it would honor all existing Nokia customer
warranties starting today.
In addition to Mr. Elop, some 25,000 former Nokia employees will
join Microsoft. Nokia estimated originally that some 32,000 would
move when the transaction was originally announced in September
2013.
However, the figure is now considerably lower because Nokia will
retain the ownership of a massive 8,000 employee-strong factory in
Chennai, southern India.
The factory, which has the capacity to produce more than 10
million handsets in a month, has been frozen by Indian authorities
due to a protracted tax dispute. Indian tax officials allege that
Nokia has wrongfully claimed tax exceptions on software exports.
Nokia has denied the allegations.
Nokia said it has entered into a service agreement in which it
will continue to produce phones for Microsoft as a contract
manufacturer. The company is also offering voluntary buyout
packages to Chennai workers to help them pursue new jobs outside
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, unloading 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 and Juhana
Rossi at juhana.rossi@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires