The net gain to Nokia from Microsoft-Nokia deal worth $7.17 billion will be around $4.2 billion.
Nokia will get enough cash to run Nokia Solutions and Networks (NSN). Nokia owns 100 percent stake in NSN. It is not known whether NSN will be sold at a later stage.
Nokia will retain the world famous brand.
Nokia will be free from competing with Samsung and Apple. Microsoft will play in a new turf. There will be more speculation that Microsoft could buy BlackBerry as well.
Nokia on Tuesday said it would focus on three areas – mobile broadband NS; mapping HERE; and technology development and licensing.
Risto Siilasmaa, chairman of Nokia, will be the interim CEO as Stephen Elop will be returning back to Microsoft to head Nokia devices business.
Approximately 32,000 people will move to Microsoft, including approximately 4,700 people in Finland. ( Microsoft buys Nokia devices for $7.17 billion in cash )
Nokia’s CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group.
The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50 percent, of Nokia’s net sales for 2012.
Nokia will grant Microsoft a 10 year non-exclusive license to its patents.
Microsoft will grant Nokia reciprocal rights related to HERE services.
Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity.
Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia’s Devices & Services business internally.
Nokia has posted 20 percent decrease in Q4 2012 income to €8.041 billion from €10.005 billion in Q4 2011.
Microsoft is expected to become one of the top three customers of HERE.
Cash crunch at Nokia
Microsoft will offer Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible bonds to be issued by Nokia maturing in 5, 6 and 7 years respectively.
Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current Mobile Phones products. Nokia will continue to own and maintain the Nokia brand.
Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems.
Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia’s own mobile devices until December 31, 2015.
Nokia will retain its headquarters in Finland. Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have employed approximately 56,000 people at the end of the second quarter 2013.