A Look Inside the Microsoft Nokia Deal

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Sept. 3 (Bloomberg) – Bloomberg’s Cory Johnson reports on Microsoft agreeing to buy Nokia’s handset unit and license its patents for $7.2 billion and the speculation that Nokia CEO Stephen Elop could be a successor to Steve Ballmer. He speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

What drove this drill into the drilldown and they've been talking about this for several months, but ultimately, why did they decide to go ahead with it?

You have seen these two companies working very closely together on the exact same product.

Right.

They've already had a partnership.

And you couldn't find two companies closer than the nokia phones and the windows operating system.

Yet the change in market share.

In the u.s., nokia had over 50% market share in the u.s. in 2004 down to single digits in the u.s. now.

So non-existent, virtually in the u.s. now.

So the fortunes in phones can change.

We have seen the share price fall dramatically over the really making this deal so much cheaper for microsoft and the new lumia phones haven't reason helped them.

And that relationship between the two companies being so close, 80% of microsoft's phones were made by nokia.

Forget htc and other companies.

Running the microsoft software is so important.

This deal is $7 billion but they're going to other areas as well.

And the guidance about this deal, microsoft said it's going to cost them nearly $7 bucks million in 2014 but it will be a profitable business to the tune of $7 million in 2015. they're hoping on a lot of things.

What's the context of this given that ballmer maz announced he's leaving within the year?

A lot of people are speculating all of the people who have been suggesting that he was a longtime executive.

Forged his partnership with microsoft and run that business.

But he hasn't been able to turn microsoft around.

And he turned microsoft around?

Can anyone turn this company around?

It's got a team suggesting as internal candidates from microsoft.

So now there's a fifth.

What i would suggest is if this deal doesn't close in time, ballmer says he's going to leave in 12 months.

If this deal might not close, he was going to remain at nokia and it's unclear if he ever will go to nokia.

This is money they had tied up overseas.

There's that.

But this is a failing business.

It's a big revenue business.

So they're doing over nearly $16 billion in sales of phones.

Most of that is what they call future phones or non-smartphones or what i call dumb phones.

They have an operating loss of $1.1 billion.

But interesting about this is those feature phones could be an advantage to microsoft because going forward, the opportunity to get first-time smartphone users using microsoft's software as their first-time computing experience ever, those people are buying feature phones now, hopefully, microsoft hopes in the future, that could be a big opportunity to still make head way into the smartphone business.

Now, we're going to hear directly from microsoft's c.e.o. steve ballmer about this deal which comes as we said, just after he announced he will be leaving microsoft within the year.

Bloomberg's tom keene started by asking ball her how he expects to gain mobile market share.

Take a listen.

This acquisition of the nokia mobile phone business is about accelerating our share position, by accelerating and improve being our agility and innovation, being able to put a clear, concise communication for one brand into the market brand, one brand, one voice and being able to be very agile in our business strategies and tactics to go to market.

I'm excited about what we've accomplished in the two and a half years that we built this partnership with nokia.

And we're extremely glad to do

This text has been automatically generated. It may not be 100% accurate.

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