From what I understand, it's not entirely stubbornness. The exclusivity agreement they made with Microsoft has significant penalties if they pull out - starting with paying back all of Microsoft's "platform support" payments (over USD 1 billion at this point, IIRC), but not ending there, I believe.
That was probably the biggest mistake 2 years ago - not just making the wrong choice (which is fixable), but walling off the best alternatives.
Was this agreement signed by the current, ex-MSFT CEO? In that case, I honestly wonder if there's going to be a shareholder lawsuit against management or board of directors oversight on making such a fatal deal.
Even if such a suit would have little merit, I wouldn't be surprised to see one. Maybe the fact that it'd a Finnish company makes it less likely? But they are listed in US markets...
Yeah. What a ridiculously one-sided deal. Heads I win, tails you lose.
If Nokia had done well, Microsoft would have acquired them for an artificially low price. Now that they have crashed, Microsoft is free to walk away. Nokia can't get out of the deal without making ruinous repayments to Microsoft. Meanwhile, MS is developing its own hardware, which will compete directly with Nokia. In the long term, who knows? They might even perhaps to scupper the whole Windows Phone project, like Windows CE before it.
As I said at the time, the absolute best case scenario for Nokia under their current course is to become another white-box OEM for Windows, operating on razor-thin profit margins. And we all know how Microsoft treats its OEMs.
Probably the best thing they could do now is go declare chapter 11 (or whatever the Finnish equivalent is) and sell the component businesses. NAVTEQ ought to be worth a lot-- after all, TeleAtlas went for several billion a few years ago. Bankruptcy might give them a chance to get out from some of these pound-me-in-the-butt contract terms, too. At this point, the company is probably worth more broken up than whole.
The plan you suggest is beyond ridiculous. Nokia has a totally decent net cash balance compared to their revenue. Their actual operations range from slightly non-profitable to slightly profitable. No company in a position like that would (could?) declare bankruptcy just to escape a relatively minor contractual liability.
So spin off the profitable parts and restructure the non-profitable ones. Or, I don't know, keep riding the failure train right off the side of the cliff. Whichever is easier.
Because Nokia is such a vital part of the Finnish business and economic ecosystem, I wonder how feasible it is to actually enter bankruptcy. As we have seen in the past with US companies, it's not always a pure business decision with these things (also, management always, always has an incentive to drag their feet in the ground and keep collecting paychecks).
Before starting at Nokia, Elop worked for Microsoft from January 2008 to September 2010 as the head of the Business Division, responsible for the Microsoft Office line of products, and as a member of the company's senior leadership team. During his time at Microsoft, the Business Division released Office 2010.[15]
Comments
From what I understand, it's not entirely stubbornness. The exclusivity agreement they made with Microsoft has significant penalties if they pull out - starting with paying back all of Microsoft's "platform support" payments (over USD 1 billion at this point, IIRC), but not ending there, I believe.
That was probably the biggest mistake 2 years ago - not just making the wrong choice (which is fixable), but walling off the best alternatives.
Was this agreement signed by the current, ex-MSFT CEO? In that case, I honestly wonder if there's going to be a shareholder lawsuit against management or board of directors oversight on making such a fatal deal.
Even if such a suit would have little merit, I wouldn't be surprised to see one. Maybe the fact that it'd a Finnish company makes it less likely? But they are listed in US markets...
Yeah. What a ridiculously one-sided deal. Heads I win, tails you lose.
If Nokia had done well, Microsoft would have acquired them for an artificially low price. Now that they have crashed, Microsoft is free to walk away. Nokia can't get out of the deal without making ruinous repayments to Microsoft. Meanwhile, MS is developing its own hardware, which will compete directly with Nokia. In the long term, who knows? They might even perhaps to scupper the whole Windows Phone project, like Windows CE before it.
As I said at the time, the absolute best case scenario for Nokia under their current course is to become another white-box OEM for Windows, operating on razor-thin profit margins. And we all know how Microsoft treats its OEMs.
Probably the best thing they could do now is go declare chapter 11 (or whatever the Finnish equivalent is) and sell the component businesses. NAVTEQ ought to be worth a lot-- after all, TeleAtlas went for several billion a few years ago. Bankruptcy might give them a chance to get out from some of these pound-me-in-the-butt contract terms, too. At this point, the company is probably worth more broken up than whole.
The plan you suggest is beyond ridiculous. Nokia has a totally decent net cash balance compared to their revenue. Their actual operations range from slightly non-profitable to slightly profitable. No company in a position like that would (could?) declare bankruptcy just to escape a relatively minor contractual liability.
So spin off the profitable parts and restructure the non-profitable ones. Or, I don't know, keep riding the failure train right off the side of the cliff. Whichever is easier.
Strangely, this kind of thing is what happens to most of Microsoft's business partners.
Also strangely, businesses never seem to learn and keep making the same mistake.
Because Nokia is such a vital part of the Finnish business and economic ecosystem, I wonder how feasible it is to actually enter bankruptcy. As we have seen in the past with US companies, it's not always a pure business decision with these things (also, management always, always has an incentive to drag their feet in the ground and keep collecting paychecks).
Their own CEO is former MS , that explains a lot.
Before starting at Nokia, Elop worked for Microsoft from January 2008 to September 2010 as the head of the Business Division, responsible for the Microsoft Office line of products, and as a member of the company's senior leadership team. During his time at Microsoft, the Business Division released Office 2010.[15]
https://en.wikipedia.org/wiki/Stephen_Elop