Microsoft, Nokia Join Hands in Smartphone War

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Sept. 3 (Bloomberg) -- Microsoft agreed to buy Nokia’s handset unit and license its patents for 5.44 billion euros ($7.2 billion), seeking to revive two smartphone businesses that have struggled for a half-decade to gain share against Apple and Google. "Lunch Money" host Adam Johnson reports. (Source: Bloomberg)

In sports, tennis pros talk life after tennis.

Yeah, retiring at 40, a very definite possibility.

All right.

We'll kick it off with tech where two big companies, ones at the top of their gain, are taking on the new leaders of the industry.

Microsoft, the biggest software company in the world, is buying nokia's mobile handset division for $7.2 billion.

The two companies missed the boat on smartphones, now they're struggling to regain market share lost to apple, google and samsung.

Through our partnership, we've already accomplished so much.

And yet clearly the opportunity ahead is remarkable, and i'm incredibly optimistic about what we can achieve together.

Microsoft, the nokia devices and services, we're after it, we're energized and we're excited to pursue our common dream of success in innovation in smartphones.

Nokia board of directors decided to enter into a transition where knee kia will -- nokia will license patents to microsoft.

The nokia board of directors believes this transaction creates significant economic value to our shareholders.

We expect it will be significantly attributed to earnings.

It will strengthen our financial position and it will provide a solid basis for future investment in nokia's continuing businesses.

Now, the gentleman you just heard will lead what remains of nokia, that's location and mapping.

Steve balancemer will be the head of the company.

Remember, he said a few weeks ago he's stepping down within the next 12 months.

So who will fill his shoes?

Word on the street, it will be this man, steven, the current c.e.o. of nokia.

He came from microsoft three years ago frying to pump life into nokia and could be going back.

We spoke with him in january about smartphone production.

I think in terms of introducing products like the lumia 920, things what we can do or problems we can solve that no one else can.

Coming with great photographic capabilities, beautiful designs, it's not just about turning out the same type of phone year over year.

It's doing things truly innovative.

We are' glad that the consumers are reacting favorably to those moves on our part.

Well, he was right about the lumia 920. it's been popular given the fact that it's cheaper both the iphone and the samsung galaxy.

But elop has been unable to take back market share.

Once at more than 50 fathers, the global share of the global market is now 3%. elop has used the existing partnership with microsoft as an selling point.

We selected windows phone as our platform so it will be a key point of differentiation.

So many things are doing things with android, we stand on our own what we're doing with windows phone.

That's the key part of why we did that, to have a bit of differentiating happening there.

We're so proud of what we're doing whether it's imaging, location-based services, wireless charging, all of these capabilities are things that ray loug us to say we have the most innovative, most competitive smartphones only the market.

So we're very happy to compete on that basis.

Can it eventually be the second biggest operating system in the world?

It can be the biggest operating system in the world.

We have a lot of things to do working jointly with microsoft to make that happen.

Taking their relationship to a new level.

Steve balancemer spoke this morning.

Well, the acquisition of the know i coulda mobile phone business is about accelerating our share position by accelerating and improving 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 being very ajile in going to market -- agile in going to market.

I'm proud of what we've been able to accomplish in the 2 1/2 years with know compeea and we're extremely glad to do this acquisition to further accelerate windows phones.

Sfeef, when you look at windows phones, by doing this transaction, are you going to push away the others that have used the windows platform?

Are they going to say forget about it, if microsoft is going to have nokia, we're not going to use them?

Well, nokia accounts for well over 80% of the windows phone volumes today, and so i think we are in a position to accelerate through this acquisition.

Certainly acceleration in windows phones is only good for windows tablets and p.c.'s, and our partners in the p.c. and tablet business that i have all talked to seem quite enthusiastic about this acquisition because what's good for phone should be good for tablet and p.c. sfeef, you've seen so much, -- steve, you've seen so much not failure but struggle in hardware where we've been a pinata of the business.

With that said, does that bring any end of debate about separating your consumer division off from your enterprise division?

Well, we're certainly focused on being a devices and services company that focuses in on the high value activities for consumers and for businesses.

And that's the strategy that we're on that our board has endorsed.

There's a huge transformation.

We're very glad to be acquiring the talented team at nokia that is really world class, at hardware engineering, manufacturing, supply chain, hardware distribution.

We think it brings us extra muscle, as a matter of fact, as we move forward down that path.

There's no debate at our board.

We're aligned on our strategy and moving forward.

It's a big transformation but that's kind of what you need to do in the technology business to move forward.

We're certainly pleased over the 33 years i've been at microsoft we've continuously moved forward, improved our positions, improved our profitability.

We serve over a billion people around the world.

We make close to $30 billion of profit.

We're proud of what we've accomplished.

As for analysts, investors, well, the reviews are mixed.

Near term, microsoft is buying business that is losing money, and the market appropriately penalized microsoft.

But strategically, if you're sitting in steve balancemer's seat, i think this -- balmer's seat, i think -- ballmer's seat, i think you've seen tremendous stock prices of samsung, google.

Microsoft's stock has lagged.

This gives them a seat at the table at a time when i think regulators want more competition.

So thrat market for -- so that the market for device manufacturers and systems may be better than what the market is giving credit for.

So i also think microsoft down the road we're going to get an activist director in january, might be thinking of spinning off some businesses.

You would combine this business with the games division which is doing just great, thank you, and you might have an entity that could sell at a superior multiple to combine microsoft right now.

I think that's the road map.

Meanwhile, as a big media investor, i'm just licking my chops, because the one thing this means in the sprint deal now that sprint's backed by soft banks' huge cash flow is more advertising.

Oh, yeah.

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

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