Nokia denies $19B Microsoft purchase, but rumored deal viewed as boon for Apple
Nokia reacted quickly on Wednesday to a report claiming its phone business was acquired by Microsoft for $19 billion, calling it "baseless." But one Wall Street analyst had another word to describe a hypothetical deal between the two companies, at least for Apple investors: "heaven."
Speculation of a new deal between Microsoft and Nokia stems from a single Twitter post made by Eldar Murtazin, editor of Mobile-Review.com (via BGR). The post comes after Murtazin had previously reported in May that Microsoft and Nokia were set to enter into negotiations for a potential deal.
"One small software company decided last week that they could spend 19 [billion U.S. dollars] to buy part of a small phone vendor," the vague tweet reads. "That's it."
As the rumor spread, Nokia on Wednesday publicly commented on the issue, and called the claims "100 percent baseless," according to Reuters. The company's stock dropped as much as 10.2 percent on Wednesday as the rumor spread.
Murtazin was one of the first to suggest in late 2010 that Nokia could ditch its Symbian platform and partner with Microsoft to run the Windows Phone mobile operating system. That agreement was eventually announced in February in a deal struck with Nokia's new chief executive, Stephen Elop.
But Murtazin did have one high-profile miss recently, when he said in December that Apple would add a USB port to its second-generation iPad. The iPad 2 went on sale in March, but only features the standard 30-pin dock connector.
As the Microsoft-Nokia rumor gained steam on Wednesday, analyst Brian White was quick to pounce on the news. In a note to investors, he declared that Microsoft buying Nokia's mobile phone division would be "a deal made in heaven for Apple investors."
"(A Microsoft-Nokia deal) should provide Apple investors with even greater confidence that the company can continue to gain market share at the expense of legacy vendors in the mobile phone market," White said. "In our view, Apple investors could not ask for a better deal, and we believe a transaction would only further Apple's market share gains in the coming quarters."
Though Nokia denied the rumored deal with Microsoft on Wednesday, White sees the Finnish handset maker as perhaps the greatest source of market share gains for Apple. Nokia has struggled of late and lost share, but continues to be the worldwide leader in unit market share.
In April, IDC reported that Nokia shipped 108.5 million total mobile phones in the first quarter of 2011. That was good for a market share of 29.2 percent, well ahead of second-place device manufacturer Samsung at 18.8 percent. LG was in third with 6.6 percent, followed by Apple with 5 percent.
If Microsoft were to actually buy Nokia's struggling smartphone business to bolster its Windows Phone platform, White believes it would put Apple in a position to make even greater gains, filling the void left by Nokia.
"Microsoft's myopic approach outside the PC market is likely to provide more of a drag for Nokia mobile phone business and uncertainty for customers, allowing Apple's iPhone to gain even further market share in the coming quarters," he said.
Though the rumors of a Microsoft-Nokia deal were outright denied on Wednesday, the Redmond, Wash., software giant did confirm a different high-profile acquisition earlier this month: an $8.5 billion purchase of Skype. Microsoft plans to use that investment to support services like Xbox and Windows Phone.
Speculation of a new deal between Microsoft and Nokia stems from a single Twitter post made by Eldar Murtazin, editor of Mobile-Review.com (via BGR). The post comes after Murtazin had previously reported in May that Microsoft and Nokia were set to enter into negotiations for a potential deal.
"One small software company decided last week that they could spend 19 [billion U.S. dollars] to buy part of a small phone vendor," the vague tweet reads. "That's it."
As the rumor spread, Nokia on Wednesday publicly commented on the issue, and called the claims "100 percent baseless," according to Reuters. The company's stock dropped as much as 10.2 percent on Wednesday as the rumor spread.
Murtazin was one of the first to suggest in late 2010 that Nokia could ditch its Symbian platform and partner with Microsoft to run the Windows Phone mobile operating system. That agreement was eventually announced in February in a deal struck with Nokia's new chief executive, Stephen Elop.
But Murtazin did have one high-profile miss recently, when he said in December that Apple would add a USB port to its second-generation iPad. The iPad 2 went on sale in March, but only features the standard 30-pin dock connector.
As the Microsoft-Nokia rumor gained steam on Wednesday, analyst Brian White was quick to pounce on the news. In a note to investors, he declared that Microsoft buying Nokia's mobile phone division would be "a deal made in heaven for Apple investors."
"(A Microsoft-Nokia deal) should provide Apple investors with even greater confidence that the company can continue to gain market share at the expense of legacy vendors in the mobile phone market," White said. "In our view, Apple investors could not ask for a better deal, and we believe a transaction would only further Apple's market share gains in the coming quarters."
Though Nokia denied the rumored deal with Microsoft on Wednesday, White sees the Finnish handset maker as perhaps the greatest source of market share gains for Apple. Nokia has struggled of late and lost share, but continues to be the worldwide leader in unit market share.
In April, IDC reported that Nokia shipped 108.5 million total mobile phones in the first quarter of 2011. That was good for a market share of 29.2 percent, well ahead of second-place device manufacturer Samsung at 18.8 percent. LG was in third with 6.6 percent, followed by Apple with 5 percent.
If Microsoft were to actually buy Nokia's struggling smartphone business to bolster its Windows Phone platform, White believes it would put Apple in a position to make even greater gains, filling the void left by Nokia.
"Microsoft's myopic approach outside the PC market is likely to provide more of a drag for Nokia mobile phone business and uncertainty for customers, allowing Apple's iPhone to gain even further market share in the coming quarters," he said.
Though the rumors of a Microsoft-Nokia deal were outright denied on Wednesday, the Redmond, Wash., software giant did confirm a different high-profile acquisition earlier this month: an $8.5 billion purchase of Skype. Microsoft plans to use that investment to support services like Xbox and Windows Phone.
Comments
I kind of want to sell my APPL right now and go all in with NOK for the next week¡
What does an oil and gas company have to do with this discussion? APPL is the symbol for Appell Petroleum.
AAPL is the symbol for Apple Inc.
The war between Apple & Nokia then becomes one between Apple & Microsoft.
Can't see any good coming out of such a deal for Apple. Apple should buy Nokia and all its patents then become a patent troll and recover some of the outlay through the licensing of those patents.
As things stand now, the worst case scenario is that WP7 totally flames out in the market and MS is relegated to the role of app maker for iOS and Android (which is actually not such a horrible thing and could still make MS a lot of money) and back-end server stuff (Exchange, sharepoint, etc).
It actually would change very little on the Android front considering MS already makes more money off of Android than WP7.
It's really not clear how MS would gain anything other than risk in buying Nokia, having already convinced Nokia to use WP7. As things stand now, the worst case scenario is that WP7 totally flames out in the market and MS is relegated to the role of app maker for iOS and Android (which is actually not such a horrible thing and could still make MS a lot of money) and back-end server stuff (Exchange, sharepoint, etc). But if they buy Nokia, the worst case scenario in flaming out with WP7 also involves losing tens of billions of dollars.
I agree completely with you.
Why Microsoft would buy Nokia? They already successfully take over Nokia direction with placing an ex-microsoft VP as Nokia CEO (Elop) that already do everything Microsoft is commanding. Microsoft strategy for everything is to tie up company to depend on them.
The war between Apple & Nokia then becomes one between Apple & Microsoft.
That's why I think it's not real. For some reason most people still see Apple and MS as the only two companies worth going toe-to-toe.
Plus, with a current market cap of over $25B, revenue of $60B*, profits of $2.5B*, and total assests valued over $55B the rumoured price isn't even close to reality. Just look at what MS paid for Skype.
* 2010 figures
What does an oil and gas company have to do with this discussion? APPL is the symbol for Appell Petroleum.
AAPL is the symbol for Apple Inc.
Really?! An entire off topic post dedicated to a single-letter typo? Really?!
I kind of want to sell my AAPL right now and go all in with NOK for the next week¡
Just for a potential 10% gain? Surely, you jest. Both Nokia and Microsoft are dead in the water. In the end it will be a two horse race... Apple and Google.
The Wall Street Casino strikes again. The House wins. Put out the rumor, short Nokia, watch it drop 10%, and snicker all the way to the bank. Happens all the time to Apple. Even Cramer admits it. Should be illegal but the proof is in the pudding.
Why they put proof in pudding I'll never know.
OTOH until recently I would have said that 19 billion was crazy just to get a patent portfolio, but after the Skype deal who knows?
For Nokia's part it would be surprising for such a nationalistic, proud company to submit to acquisition by an American company, but then again I don't think most people expected them to adopt WP 7. And remember, they're now helmed by an ex-Microsoft guy, who brought in more ex-Microsoft guys to the corporate offices.
Some people joked that all that was a slow motion stealth acquisition, maybe not so far off the mark?
Declare EOL for Symbian and make several downward earnings predictions tanking NOK stock, negotiate sale of mobile division to Microsoft at below market price, go back to work for Microsoft.
Elop = trojan horse
Declare EOL for Symbian and make several downward earnings predictions tanking NOK stock, negotiate sale of mobile division to Microsoft at below market price, go back to work for Microsoft.
I was thinking the same thing!
Why they put proof in pudding I'll never know.
People want GUI access.