Is Microsoft Overpaying for Nokia's Smartphone Business?

Microsoft  (NASDAQ: MSFT  ) shook up the tech world this week by announcing a $7.2 billion deal to acquire Nokia's (NYSE: NOK  ) handset business as well as licensing its patents. Of that total, $5 billion will be for the smartphone operations. The software giant is making some aggressive growth assumptions to justify that hefty price tag.

There are plenty of historical examples of long-term forecasts proving to be way off target, and this could just be the latest example. Microsoft may be forced to move into lower price points for success, which would put pressure on the operating margins that it's trying to grow.

In the following video, Erin Kennedy discusses the major deal with Evan Niu, CFA, and Eric Bleeker, CFA.

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  • Report this Comment On September 08, 2013, at 5:57 PM, techy46 wrote:

    NOK had 3.6b shares out at $4 PS for a market cap of $14.4 billion and MS paid $7.2 fpr 50% of NOK.

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