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Tuesday, September 3, 2013

Daily Report: Microsoft Acquires Nokia Units and a Top Executive

Microsoft says it has reached an agreement to acquire the handset and services business of Nokia for about $7.2 billion, in an audacious effort to transform Microsoft’s business for a mobile era that has largely passed it by, Nick Wingfield reports.

Late Monday night, Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which will turn the Finnish mobile phone pioneer into the engine for Microsoft’s mobile efforts.

Stephen A. Elop, a former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes, setting him up as a potential successor for Steven A. Ballmer, Microsoft’s chief executive. Mr. Ballmer has said he will retire from the company within 12 months.

“This agreement is really a bold step into the future for Microsoft,” Mr. Ballmer said by phone from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”

The fortunes of the two companies in the mobile business have become closely intertwined since they signed a pact two years ago for Nokia to use Windows software on its phones, but it has done little to turn either company into a leader in the mobile business.

Windows Phone accounted for only 3.7 percent of smartphone shipments in the second quarter, according to the technology research firm IDC. Nokia remains the second-largest shipper of mobile phones in the world after Samsung, but that is largely because of lower-end feature phones, from which consumers are moving away. Nokia is no longer among the top five makers of smartphones.

Mr. Ballmer declined to say whether Mr. Elop, considered a leading contender to be his successor because of his familiarity with Microsoft and the importance of mobile to Microsoft’s future, will be considered for the job.

Mr. Elop, a native of Canada whose family still lives in the Seattle area, says he believes the industry is at a “tipping point” where a third mobile phone ecosystem, based on Windows Phone, will emerge as a more vibrant alternative to the iPhone and devices running Google’s Android operating system.