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Nokia's Handset Division Sale Postponed - Analyst Blog


The sale of Nokia Corporation's (NYSE: NOK) handset division to the world's largest software maker Microsoft Corporation (NASDAQ: MSFT) has been postponed until Apr 2014. The deal – which was expected to close by the end of this month – is facing regulatory and legal obstacles from certain antitrust authorities in Asia.  

The deal has received approval from the European Commission and the U.S. Department of Justice. However, Nokia is facing a major tax dispute in India. The Tamil Nadu tax department has charged Nokia with a 300 million euro sales tax bill for selling handsets – manufactured in the company's Chennai plant – in India instead of exporting them.

In Sep 2013, Microsoft announced the $7.2 billion (5.44 billion euros) deal with Nokia. Per the deal, Microsoft will take possession of Nokia's devices business, which boasts the very popular Lumia line of smartphones that run on Microsoft's operating system. Microsoft's revamped mobile operating system (OS) has been facing severe competition from Google Inc.'s (NASDAQ: GOOG) Android and Apple Inc.'s (NASDAQ: AAPL) iOS.

The deal will enable Microsoft to cash in on opportunities in the rapidly evolving mobile phone segment. On the other hand, Nokia is emphasizing on network infrastructure segment for its future growth. After the successful culmination of the deal with Microsoft, Nokia will receive majority of its revenues from base stations, antennas and other network equipment. 

 Recently, Nokia received a million pre-orders in China for its upcoming budget-friendly smartphone – Nokia X. The smartphone is designed to run on Google's Android and is scheduled to hit the market on Mar 25, 2014.

Nokia currently has a Zacks Rank #3 (Hold).

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