WSJ: Microsoft and Nokia were close to a buyout deal, but talks broke down

Following up on the Huawei news from yesterday, the Wall Street Journal is now reporting that Microsoft and Nokia were in advanced discussions about a Redmond purchase of the Finnish phone maker, but the talks have failed to materialize an agreement.

Citing “people familiar with the matter” the online paper notes that discussions eventually broke down due to “the price and Nokia's own strategic predicament”.

Deliberations were evidently held in London as recently as this month, but due to the talks faltering, they likely won’t be revived anytime soon. The WSJ also adds that both companies were close to an oral agreement with Microsoft purchasing the device division of Nokia, using some of Redmond’s reported $66 billion held in off-shore businesses. That method would have let Microsoft avoid a hefty tax penalty for purchasing the massive phone maker.

The Huawei snafu becomes clearer

With this news coming forward from a reputable paper, Huawei’s statement yesterday (later rescinded) makes more sense. It now seems obvious that Huawei was aware of the Microsoft-Nokia dialogue and were either goading Microsoft into paying more (by acting as an interested partner) or they were “publicly negotiating” with Nokia by showing interest in a purchase themselves, knowing that Microsoft had walked away.

This raises some very interesting questions, including whether or not Nokia is now looking for other suitors for a buyout, including Asian companies like Lenovo or Huawei or if Microsoft was just a one-off option that failed to materialize.

What’s more, now that Huawei has smelled blood in the water, how aggressive will they get in trying to buyout Nokia?

Lots of questions with few answers loom as the future of Nokia has just become a little less clear tonight. Like much in our audience, we would have preferred a Microsoft-Nokia deal, but this was not the first time these companies have been in talks (see July, 2012) and it may not be the last.

Source: WSJ (paywall)

Daniel Rubino is the Executive Editor of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft here since 2007, back when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, Microsoft Surface, laptops, next-gen computing, and arguing with people on the internet.

179 Comments

Microsoft SHOULD buy Nokia. Screw Samsung, screw HTC, screw all of the others imo. Control your phone completely like Apple.
Quality and engineering will go down. Nokia is Nokia because of its geniuses inside the company. If Microsoft were to take over, development of WP would slow down more and hardware quality will be affected since many of Nokia top employees would leave. Nobody should take over Nokia.
Yes because as we've seen with the Microsoft surface quality is not important to them.
exactly... I own a surface and an iPad 3 and one looks like a great piece of engineering and the other one looks boring just like the iPad 1...
I've supported Nokia by getting two devices lately, and I'd love to compliment my (great purchase of a) Surface Pro with a Surface phone. I highly belive it would feel and look equally well as the Surface Pro.
Surface is one thing, designing and manufacturing not just one but 10 different smartphones is a completely different thing. Nobody has moe experience in this than Nokia. And we've seen what happens to touch cover after a while.
Honestly I think you overestimate the influence MS asserts onto their acquisitions. Look at the Skype buy out. 2 years later and you still have the situation where Skype releases features to all other platforms before Windows Phone. So I have a feeling if MS bought Nokia, it would continue running much like it does today.
Aaron M +1
For every Skype buyout, there's the Danger buyout...
I'm hoping that the reason we are waiting so long for skype is because they are putting it straight in the OS...
+1
I didn't say they should squash Nokia, I said they should buy them. Let them operate as a separate but very close company and make things move faster within the ecosystem. While they work closely together right now, it would be more streamlined if MS actually owned them. Also would be beneficial for the Nokia portion making phones to have access to the Surface team, and the rest of MS.
Hmmm independent operation sounds good , just like Skype ?
I imagine this going like this : Nokia gets bought spends a year to get its shit together (just like Skype)
Nokia produces Android phones and even IOS phones for some reason before producing a half ass WP phone ( Much like skype did with its shitty first client on WP8)
Nokia updates Android and IOS phones before its own damn devices. (Much like skype and video messaging?)
I really don't wont Nokia to be another Skype , Just leave that company alone , Beuracracy doesn't work in the Smartphone biz and Nokia almost died because of it , it doesn't need a worst one . :)
I'd say more like the Azure team, or the Xbox team. Skype isn't a great example. Skype is a cross platform software, Nokia phones are to be a hardware exclusive for WP. MS buying them wouldn't make them all of a sudden make Android phones. It would actually be the only thing that keeps them from doing this.

The only way to keep Nokia exclusive to WP is to have them part of the company umbrella. Otherwise, in a couple years, they could go with other OS's, or in other directions all together. Phone, Maps, Services. Nokia fits nicely into what MS is trying to build.
I agree to this. I think Microsoft should buy Nokia, at least the mobile division and let them run like they are now. Without to many interferences. The buyout only to prevent hostile takeover from other company that want to cripple WP by any means. Imagine if Google support Huawei to buy Nokia, and force Nokia to ditch WP. We, WP users, will definitely screwed up by then.
As for Skype. I think Microsoft did exactly the same with what we hope for if Microsoft nuy Nokia, let the company do their things. Skype already support Android and iOS from long time ago so it make sense if they port their app to them first. Although I kinda want Microsoft to push Skype team a bit so it not left out Microsoft's platform. This is 180 degrees differences if we look at how Google interfare to much on the YouTube team.
Right l don't want to see anyone buy Nokia, investing is a different story!
+1
Same here, Microsoft would be the best one to buy them, but even this has downsides.
I would hope here that Microsoft would buy into Nokia a share (lets say 20% to prevent competitors from buying them out) and form another long term partnership to go beyond 2016 to push Windows Phone forwards.
As long as Nokia is independant I think we get the best of both worlds, otherwise I could see longterm Nokia as someone else subsidiary just declining.
I agree with this eleven billionty percent.
i guess rumor looks like to me is they wanna do like nexus device.
Couldn't agree more... Let Nokia continue to design and innovate phones.. Nokia is starting to surface and if its bought out sorry to say windows phone(a great innovation) will dive under water... I
This^
If there is to be a buyout, then yes, Microsoft is the most desirable party to do so, however I am a lot more in favor of Nokia getting their stuff together (as they are) and stay an independant entity and one of the best EU tech companies.
Hopefully EU will step in if Nokia is pushed by its stupid inpatient shareholders into a rash action and try to sell to an undisirable entity with tarnished privacy and security record.
What about the outpatients? Sorry. Couldn't resist.
LOL
+1 lol
They don't need to spend $10b+ to do it. Just source it out like surface.
Wow
It would need to be MS. Otherwise, WP would go the way of Zune player. imho
+1 nobody except Nokia cares about WP, if some another company buys it, I don't think it will produce WP anymore. MS should invest in Nokia as a precaution.
Probably because they wanted them to move to Redmond. =(
Not really a fan of MS buying Nokia, they need to be bought by a company as dedicated as them, not Microsoft who cant update the OS in a timely fashion or has divisions that dont support their own mobile OS.
There is only one tech company that would fit that description and they allready do their own phone last I checked..
I agree, Microsoft has not shown the same committment Nokia has, making the OS better to allow Nokia to release outstanding hardware would be the best option.
Not true at all
Said company is also looking for various options to their major breadwinner. iOS on Nokia phones? 12 billion is decent change, would piss off Microsoft though.
IOS with EOS would be the fastest selling phone of all time.
Android with EOS would be fastest selling phone of all time.
I would rather puke myself dead than buy another android, even if it came with EOS, shitty company, full of malware, no sense of privacy, censors the news, yes it might sell well, I would rather move to another universe
+10000 for inside man
LoL...Don't hate Android too much buddy but your comment really cracked me up I like it.
I don't see the deal happening until Microsoft is forced to because someone else is trying to buy them. Right now, they get all of the benefits of a purchase without spending a dime. And the hope is that eventually Nokia will be healthy enough that they don't need to sell to any other company.
Besides the Billions already paid to Nokia and the Billions more to advertise their Lumia phones, not a single dime!
Thay's nothing for MS if they really want to continue WP development, they should never let any other company buy Nokia, even they shouldn't, too,they should invest in it.
Better Microsoft than Huawei.
I'd prefer Nokia remain Nokia. The way MS has been handling things on all fronts, I really think they need to improve things, before they go after another acquisition, especially in mobile.
Also really doubt that Huawei would pull off this deal. I think the synergies between MS and Nokia are significantly larger than those of Huawei and Nokia. So if a deal were to happen MS has deeper pockets and higher justifiable investment value in my opinion, affording them a higher price tag.
Sam you've read my mind.
Now you're thinking about pizza.
More of cafe latte
who isn't ;)
Nobody should take over Nokia. As long as WP continues its run in the charts, Nokia will remain in business. If WP completely flops (God forbid), they will just move to another OS.
Go get em, MSFT. Or at least help them go private. Nokia has got to be protected.
Would probably be a good idea to go private, so the CEO & co. are not pushed into stupid decisions by greedy dumb as fuck shareholders (not talking about the small guys who hold just a few shares).
Thank god that didnt happen.
Everyone's talking about buying Nokia these days. How the mighty have fallen!
Mmm :'(
Sell to Huawei? Nowei!!!
Lmao classic
LOL
Nice!
I think Huawei won't even have the funds to buy Nokia.
Daniel, weren't you saying in your other post, how Nokia isn't for sale and Huawei was full of hot air? Rumors that Nokia was on the sales block have been around since Elop arrived.
If anything, Nokia slimming down, releasing thousands of employees, selling off factories and even the coroporate HQ was evidence that they were making themselves more attractive to a potential suitor.
IMO, Nokia just simply does not have the money on hand to survive long term, if Windows Phone stays in single digit market share for another year. They basically need to bought out in order to simply keep going.
I still think Huawei is full of hot air. Read what I wrote above and yesterday again. It sounds like Huawei caught wind of the talks between MS-Nokia breaking down (just as WSJ did) and have publicly (not privately) showed interest in buying Nokia. As I said yesterday, their *intent* to buy Nokia was not challenged by their Reuters "recant". If Huawei and Nokia were already in talks--actual, real talks--they wouldn't have said what they said yesterday (and later rescinded). Huawei would love to buy Nokia, but it doesn't mean Nokia wants to sell to them. All we know is Nokia was willing to sell to Microsoft. I agree Nokia has to turn around soon, but none of this is accidental--either by Huawei or the WSJ story. This is some strategic maneuvering going on by relative parties.
A more likely potential suitor for Nokia is likely either Lenovo, or for a dark horse, HP, looking to get back into the mobile game after stumbling badly with Palm.
If Sony weren't also tight for cash, they'd likely be a perfect buyer for Nokia, as they had a presence in Europe for years via their partnership with Ericsson.
Not HP. Dont let them near another mobile company.
What I really dont understand is why Microsoft is in talks now? Why not before when Nokia was actually much cheaper? I mean they could have bought Nokia when its stock was at an all time low and use the purchase to massively restructure. Granted I only play a business man on the interwebz and maybe it is better to buy after the restructuring and as the company is on the way up.
Probably because it's only now that Nokia has shown enough after rising from the grave for others to be interested...
I'm with the others who say that I'd prefer for things to remain as they are. But if there's a real danger that someone else buys Nokia and ends the company's WP phone production, MSFT almost has to move.
Now do I have total confidence that MSFT wouldn't screw up Nokia? No. But we might have to settle for that risk. It beats the possibility of seeing this beautiful 92x series running Android. :(
You call WSJ an online paper - that says enough. You should really stick to technology - writing about finance is not your expertise, and speculating what should be said in that situation is not what you are good at.
Your opinion...has no value to me :(
Nor to me.
I just hope they merge and become better friends than spongebob and Patrick star! That way with nokias brains and microsofts money they would be able to execute the plans of taking over the world a success
P.s. Nokia MUST be protected if Microsoft wants windows phone to survive
Microsoft should get off their butts and update the OS so OEM's can use the best hardware and innovate if they want WP to survive. Buying Nokia then having them wait around using old tech wont solve anything.
+1
This is a huge issue, and very important for the future of the platform. Microsoft's development of the platform needs to happen faster, not to mention making it more open and less restrictive to developers.
The languid pace thus far isn't doing either Nokia or Microsoft any favors.
Look at Joe belfiores latest tweets..
His tweets answer nothing. Bottom line is, when you want to gain market share, you gotta move faster than the competition, especially when you are missing a number of basic features that the competition has. And Johnny is right, if MS moves faster on the OS end and the apps end, everyone comes away a winner. Nokia has shown that it's firing on all engines and the moment OS improves and hardware specs are boosted, they'll have even better phones out. Improved OS, improved ecosystem = more Lumias sold, the sooner the better.
Joe Belfiore should stay off of Twitter. That's what Ben Rudolph, is for. It would be fine for him to respond to actionable tweets, but his teasers, and, in past promises, of things that never materialized, are problematic. I like the snarky retorts, to the trolls, and non constructive posts, though, Daniel. Taking a page from Paul Thurrott's book, eh?
+1
as someone said yesterday, Microsoft should just take a large stake in them to help Nokia go private and that will put a stop to all the speculation about shitbags like Huawei buying them. As long as there is public stock dangling out there for some thug to buy Nokia will never be safe.
What does all of this news mean? I hope not the end of WP8!.. :-(. With Nokia seemingly the only dedicated WP8 OEM serious about WP8, (pardon to HTC, Samsung, etc...) I am a bit unnerved by these latest developments. Are the investors really goading Nokia to do something instead of looking at long term patience with WP8?.. Outside of MSFT, I don't trust any other potential buyer would support WP8. :-(....
Microsoft won't let Windows Phone 8 go. Remember the rumors of a "Surface phone" and how we said that was Microsoft's Plan B? Think about that in relation to this news...
Daniel, I remember you denied this news back in the day. :)
True Daniel.. Altho Microsoft is no newbie at selling hardware, the phone game is different. Its to early for the surface phone.. The surface phone will have some die hard fans jumping to it( i know i will) but alot of people still thing the name Microsoft being a bad Oman.. And i can not see the surface phone succeeding till that changes..
Daniel, I read that too somewhere, basically asking WHY? would Microsoft want to buy them considering their expertise in Operating systems and hardware, They on their own could come up with the Surface phone and basically dump Nokia, I think the reason why, is because the Nokias past and also that the Lumia is finally going up and their getting people to switch, and if suddenly Nokia decides to switch to the droid say in the 41 MP version. Then all the marketing they have been pushing out has gone for nothing. Also buying Nokia they would had the production set up immediatly to make any phone they wanted. I think that and the marketing is the reason why Microsoft wanted to buy Nokia out, because their hurting and bout the only way to save them is to buy them out. I think the 41MP phone would sell like crazy but what if it didn't and the pictures would really blurry, and also what about size? a 8 MP phone you can fill your phone up quick especially if the phones pics are 20MBs in size. The only thing I think is more, its probably over pennies on the deal and one or the other has to say YES.
Yeah you're right. Too much has been invested in WP8 to let it go down the drain so easily!
Time to buy more shares, while its still warming up!
I'd say it's only because of Nokia Windows Phone OS is selling across the globe or would have been flop long back as HTC, SAMSUNG, LG, HUAWEI, ZTE. Are the only OEM Windows Phone have who all pay more attention to Android than WP. Nokia has been best innovator in WP OS. Highest Seller & advertiser too whereas other OEMs hardly launch their WP phones, apps or updates like HTC & SAMSUNG..!!
This is a little scary. Nokia is the beating heart of Windows Phone. This is a deal MS should probably make regardless of cost.
Does anyone know how long the MS and Nokia agreement is for ?
I would beleive that they can't make android during the contract.
I wonder how confident Nokia is feeling after literally throwing everything at the wall and making only small dents? Do you think they are pissed at elop for gambling and not having a big enough return to appease the board? This is so weird to think Nokia is on the ropes after being so mighty.
They have been on the ropes for the last three or four years.
True but this just seems bad...I am an android guy that likes to dabble in wp but this is the bread and butter of the platform so it needs to get healthy fast
Rome wasn't built in a day
The stock price won't have too much to do with price of Nokia at this point. If the stock was at 10, maybe... But the bottom line price would be valued at way above current per share cost. I would expect at least double.
Microsoft needs this to stay relevant for the next 10-20 years. People are showing that they really don't want windows computers because they are buying ipads and Android tablets by the millions. Windows phone needs to survive in order for mS to have a future in the mobile world.
I wonder if the deep ties to Finland is putting a big bump in the road for MSFT, as a big though peace to swallow? Politics, and the Finnish people probably have national interests that works horrible for a company like MSFT. Nokia is more then just another company, they have a country that probably is willing to protect it. I say probably since Nokia is second biggest among the people of Finland right now.
^true
that was probably a sticking point, but I for one would prefer for Nokia to remain in finland and remain independent this way innovation cannot be stifled.. anyone recall what happened to the tablet that was never to be aka the "Courier tablet" and its entire team?...
I think if they really wanted to sell it would be in 2014 when they would regain # in sales behind samsung and apple ..
I'm sure in 2014 Nokia will be selling 50 to 100 mill phones a quarter... this is great quality and MS Needs someone to push them with getting stuff out the door.. Next week we should be hearing how Windows Phone 8.1 will change everything for developers ... They have been hinting for 5 years now its time to produce... NOW!!!!
If anything MS should outsource the surface manufacturing to Nokia.
Samsung should buy Nokia.
Gods forbid!
I'm actually not against this. Samsung's industrial designs + Nokia's patents and camera tech + WP would be a dream.
Ah hell naw! We won't get updates in a timely manner and quality will lessen. If this happens I can't continue
Seconded!, think about the ramifications this would have on the mobile industry as a whole not only Windows Phone, samsung will just kick it aside as there would be one less competitor to worry about as Nokia is the only OEM to go to for WP. HTC.. Well they have been struggling and will probably get bought out sooner... if those rapid high profiles exits are anything to go by.
Why should there be talks of a buyout. If NOKIA seems to be in trouble then just announce that they will start building Android Phones, that simple. Shares will skyrocket, consumers happy, shareholders happy, NOKIA will start outselling samdung and its windows lineup in no time.
Just think about it, if samsung can build, bada, android, windows phone, tizen, what not, why cant NOKIA make android phones as well? PLZ dont tell be its the fragmentation, or too crouded. Its what selling. I like windows phone, but i love NOKIA. Its a brand ppl trust the most.
There are talks of a buyout because Nokia's share price is low and therefore the overal company value is low. Another company can come in and buy Nokia at a cheap price, properly synergize the company and in turn make much greater future profits for there customers.
In this case, Nokia is an especially good target because they have basically accomplished a turnaround and they are now seeing revenues and sales start to rise. And with Nokia's technology and the Windows Phone 8 OS, things are lookin very good.
Microsoft and others see this!

Windows Phone OS on Nokia devices is working...give it more time to see this fully. However, after a few more quarters of news from Nokia, the share price is likely to be much higher and then it will no longer be a takeover target.
I believe Nokia should stand alone and keep innovating. I remember when apple was on its knees and Microsoft bailed them out. Nokia has a huge following and it will return to the top again
I think some people have forgotten about how MS bailed out APL, which is a pity.
Oh noes, the sky is surely falling this time!!
I am against Nokia being acquired by Microsoft, although I am a big fan of both companies. Each is better operating separately.
well done elop

http://communities-dominate.blogs.com/.a/6a00e0097e337c8833017ee44107c1970d-800wi
If that is even close to true, then screw you Elop.
First off, half of that graph is not labeled...it's like a 4th grader made it. Second, it's made by an Tomi Ahonen, a well known and vehement anti-Elop writer. He hates everything about Windows Phone, Microsoft and Nokia adopting it as a platform--has been pushing for his dismissal since day one. Just saying, know your source. That guy is terribly biased (and a terrible writer).
A Microsoft owned Nokia makes me wonder of just one thing. How do you do a Ctrl+ Alt+ Del on a smart phone?
No way this deal would be good. For a reference, lets see how Moto is doing in the hands of Google.... I understand MS desires to get into the device business but they're better off building from within, not buying a firm to build for them. That Sidewinder team can't do just mice and keyboards all year long.
I agree. It would go south in one of two ways: 1. Nokia flouders into obscurity, much like Motorola has under Google's ownership, or 2. other WP8 OEMs would "bow out" since the maker of the OS is now making their own devices to compete with theirs (HTC, Samsung, Huawei, etc). That would be like Apple licensing iOS to other OEMs. Which manufacturer would want to even try?
MS buying out Nokia would (in my opinion) kill competition in the WP8 market, drive sales and marketshare down, and WP8 would fade out. Hopefully, that won't happen, and the other OEMs will step up their game for the next generation.
What competition? The latest reports I have seen show that 83% of all Windows Phones sold are Nokia. All I hear about is a new Nokia Phone launch somehwere in the world every month or two. I hear of no Windows phones from Samsung or HTC.
Just my own personal opinion, but I would guess that Nokia will own around 90% of all windows phone sales for the latest quarter ending in June. We will know in a few weeks.
Do a deal but only after Elop is fired.
Don't think the Finnish government like the idea of lot of money outflowing abroad, it'll do all things possible to avoid such a thing, thinking even in a government subsidy.
I really would like if MS would just hand over the WP OS to Nokia, drop the other OEMs and let Nokia run the mobile division. Yes I know it doesn't make sense in the business world or how it could be done, just let me dream damn it!
Couldn't agree more with ur statement, ive thought the same myself for a while, but yeah only a dream.....
I agree 100% Let Nokia set the pace and have the wp OS adjust to accomodate instead of having Nokia fenced by the limitations of the OS. It would have been fine if the wp department showed it can make changes to the OS quick enough to adjust to current needs and wants of customers or the pace of hardware innovation however from my perspective they seem to be sitting on their butts without a care in the world while Nokia is forced to work around them to get great wp devices with newer hardware ready.
No way...let Nokia make devices..let MS run the OS... Windows is doing a fine job at it despite people feeling they are moving to slow...giving WP to Nokia makes no sense....
Microsoft should by Nokia it might be there best buy
I agree...Skype is starting to be integrated as the main Live communicator, but Nokia and the phones would be accretive to ea