Could This Big Acquisition Save Nokia?
According to a report from Reuters, Finland-based Nokia (NYSE:NOK) is looking into a possible purchase of the American equipment maker Juniper Networks as a way to grow its Nokia Solutions and Networks unit while the company completes the sale of its handset division to Microsoft (NASDAQ:MSFT). The story was first reported by the German publication Manager Magazin Online, which heard about the plans from unnamed sources familiar with the matter.
Manager Magazin said that NSN’s chief executive, Rajeev Suri, has come to the U.S. to speak directly with Juniper about the acquisition, which would be one of Nokia’s largest, as Juniper has a market value of $13.7 billion.
The move would be advantageous for Nokia, as its network business has performed poorly. Since it will be one of the major assets left after Microsoft takes Nokia’s smartphone business, pouring money into NSN would be a move to restructure Nokia’s business to focus more heavily on network services. Analysts cited by Reuters said that smaller network players will likely in the coming years seek to combine with bigger companies that have more money to spend on research and development.
Nokia’s Lumia line of smartphones, which are powered by Microsoft’s Windows Phone operating system, have been largely unable to compete with devices made by Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK). Since recent research has predicted that those two behemoths will continue to dominate the smartphone market in developed countries, it looks like selling the handset unit to Microsoft was a smart move. As for Microsoft, it’s hoping that owning the unit itself will allow the company to fully leverage its power to make and sell smartphones. Microsoft has struggled in recent years in part due to its failure to capitalize on mobile soon enough.