Business

Nokia: How about $2 billion now? Microsoft: OK

Almost $2 billion in advance: That’s what Nokia is getting immediately, taking Microsoft up on an option for cash that can later be deducted from the purchase price of the phone maker’s devices and services division. Does this mean that Nokia’s desperation for cash was a key driver of the acquisition?

Since the deal was announced at the beginning of this week, Nokia watchers have wondered about the reasons, particularly since the Windows Phone platform was climbing into the much-coveted position of third place in mobile platforms. Was the deal driven by Microsoft attempting to prevent Nokia from going Android, or was it Nokia on the verge of going bankrupt? This sudden infusion of cash would seem to argue that Nokia’s stability was the driving motive.

In a statement released Friday, the Finnish company said that money will be used to prepay the financing that had been raised to buyout last month Siemens’ 50 percent stake of the companies’ network equipment joint venture and “for general corporate purposes.” Interestingly, the Siemens purchase had been seen as an effort by Nokia to raise cash to turn its Windows Phone handset business around.

The cash will be raised through three series of convertible bonds issued to the Redmond, Wash.-based tech giant. Of course, the acquisition is not quite set in stone yet, so if it falls through, Nokia will owe the money to Microsoft on a series of due dates stretching from five to seven years. Or Microsoft can convert them into Nokia shares.

On Monday, Microsoft and Nokia announced that the former would be buying the latter’s devices and dervices business for $7.2 billion, and licensing relevant patents, leaving Nokia to focus on the Siemens co-venture, its HERE mapping and location services, and a technology development and licensing business.

More information:

Microsoft Corporation is a public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through ... read more »

Nokia’s mission is simple: Connecting People. Our goal is to build great mobile products that enable billions of people worldwide to enjoy more of what life has to offer. Our challenge is to achieve this in an increasingly dynamic an... read more »

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