Nokia deal still irks Microsoft watchers who ask why pay so much for so little?

Nokia deal still irks Microsoft watchers who ask why pay so much for so little?

We all know Microsoft wants to move on with its "devices and services" push but since the devices part of that effort is now pinned largely on Microsoft's $7.2 billion buyout of Nokia's smartphone business, some folks just can't forge ahead. The fact is, the Nokia deal, announced early this month, still sticks in the craw of many who contend Microsoft paid too much for too little way too late.

Early Friday, Nomura Securities analyst Rick Sherlund cited the deal as the main reason he cut his Microsoft earnings estimate. Sherlund cut his projected FY 2014 earnings per share to $2.49 from $2.60 "to reflect the estimated impact from the pending Nokia acquisition .. and to a lesser degree some additional lower growth and margin assumptions," he wrote in a research note. Sherlund's numbers assume that the deal closes as expected in March; Microsoft's fiscal year ends June 30, 2014.

Others, including former Microsoft execs, are even less bullish on the Nokia buy. If Microsoft wants to focus on business users, it would have been smarter and cheaper to buy BlackBerry, which is struggling mightily (it just reported a $1 billion loss) but still holds key business accounts with its BlackBerry Enterprise Server (BES), they say. Albeit privately.

"The irony is MSFT bought the wrong ," one former Microsoft exec said via email. "BlackBerry has enterprise presence, was half the price and [is] on the same continent. MSFT just added 30,000 employees in Finland. Google is now making Moto X in Texas. Stupid acquisition."

One rationale for the deal - that Nokia accounted for 80 percent of Windows Phones sold - is a non-starter in his view. "Eighty percent of a small number is an even smaller number. Microsoft should have milked the BES business and offered a better Windows Phone alternative. Instead they are going to fight it out on the airwaves and in shopping malls ( only a small percentage of malls where they actually have stores ) across the county."

Others say the strength of BlackBerry lies in its compact and secure phone OS. "That's the real asset - that OS is exceptional and there would be a lot of opportunities to embed that in cars and other non-phone devices,"said one industry pundit.

But, he cautioned, the BlackBerry OS wouldn't fare well at Microsoft, which, after all the angst of the last few years, still wants to slap Windows everywhere.

So I pose it to you GigaOM readers: Would BlackBerry have been a smarter deal than Nokia? Use comments to opine away.

Related research

Subscriber Content

?Subscriber Content comes from GigaOM Pro, a revolutionary approach to market research without the high price tag. Visit any of our reports to subscribe. The future of mobile: a segment analysis by GigaOM Pro Why Google Android's Electric Vehicle Deal With GM Matters Report: How Mobile Cloud Computing Will Change Tech

By Barb Darrow

Like this post? Share it!

Follow @gigabarb or@gigaom for more stories like this.

Get top stories delivered daily. Subscribe

You're subscribed to our newsletter. If you'd like, you can update your settings

Join the conversation

Advertisement

Related stories Boston University sues dozens more tech firms for violating 1997 patent

Boston University claims that Microsoft, BlackBerry and many other technology companies are violating the same patent it...

BlackBerry loses nearly a billion dollars as sales of new handsets falter

BlackBerry's second quarter numbers are out and there's little good to be seen: Revenues are down 45...

Steve Ballmer bids (what else?) a loud, tearful adieu at Microsoft meeting

Microsoft's outgoing CEO took the stage in Seattle to dance, jump, yell and cheerlead. But mostly to...

news by September 27, 2013 at 11:50PM