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Why Nokia Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Nokia (NYSE: NOK  ) soared 30% today after software giant Microsoft (NASDAQ: MSFT  ) agreed to acquire its handset business for about $7.2 billion in cash.

So what: Nokia and Microsoft have been struggling to gain traction in the smartphone space since forging a partnership in 2011, but today's deal should help the cause by allowing Microsoft to have total control over how the handset devices work with its Windows Phone software. Unfortunately, it also means that Microsoft is clearly trying to take on mobile computing gorillas Apple and Google, a fight that Wall Street isn't exactly confident that Microsoft can win.

Now what: Microsoft hopes to close the deal early next year. "Today marks a moment of reinvention," Microsoft CEO Steve Ballmer and Nokia CEO Stephen Elop said jointly. "With the commitment and resources of Microsoft to take Nokia's devices forward, we can now realize the full potential of the Windows ecosystem." The deal is also fueling speculation that Elop will emerge as the best candidate to succeed Ballmer, so the story is certainly worth paying attention to.

The titans of tech are battling over the future of a trillion-dollar revolution: mobile. Microsoft's purchase today is yet another example of how fierce the competition is in this space. To find out which of these tech giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll learn about each company's playbook and get access to our experts' latest thinking about which companies are best positioned to profit. To grab a copy of this report, simply click here -- it's free!

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  • Report this Comment On September 03, 2013, at 5:56 PM, whatsthepoint wrote:

    This doesn't say anything about why Nokia popped. $7.2 billion is a lot of cash to be sure, but is Nokia really worth 30% more today than yesterday? It sold its core business and most of its top management and designers, and is now essentially a maps and R&D firm. So why did it pop? This article provides no clue.

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