Microsoft has bought Nokia’s struggling mobile phone business for €5.44bn (£4.61bn) in an effort to “accelerate” its challenge to the dominance of Apple and Google.
The deal will see Nokia’s current chief executive, Stephen Elop, join Microsoft and makes him favourite to replace Steve Ballmer, who announced his retirement last month. Labrokes said he was now 4/6 favourite to take the role, with Facebook’s Sheryl Sandberg 7/1 and former Microsoft executive Steve Sinofsky 12/1.
Nokia’s chairman, Risto Siilasmaa, admitted that the Finnish company’s effective exit from the mobile phone business it pioneered was an “emotional” decision but made financial and strategic sense.
He said it lacked the resources to properly promote its Lumia smartphones, which use Microsoft’s Windows Phone operating system, in a sector dominated by the Apple iPhone and handsets running Google’s Android software, particularly Samsung’s Galaxy range.
He said: “The industry is becoming a duopoly with the leaders building significant financial momentum. Nokia alone doesn’t have the resources to fund the required acceleration.”
The struggles of Nokia’s mobile phone business, which accounted for around half the group’s revenues last year, have weighed heavily on profits. In the first half of this year underlying margin was 4pc, it said, but would have been 12pc without having to battle in the fiercely competitive sector.
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