Microsoft buyout of Nokia possible and Elop is key, says analyst

If Microsoft wants to acquire Nokia to gain control of its supply chain and extensive patent catalogue it will have to strike while the iron is hot and, most importantly, Stephen Elop is still CEO.

That is the opinion of IDC analyst Francisco Jeronimo who told Know Your Mobile that a Microsoft buy-out is not only possible, but also makes a lot of sense.

‘If [the Microsoft buyout of Nokia] happens it will happen during the next two to three quarters,’ said Jeronimo.

After poor sales of Windows Phone Nokia handsets and a series of staff reductions many, particularly the Nokia board, are likely beginning to question Stephen Elop’s position at the helm of the company. Jeronimo claims Elop’s days are numbered should Nokia continue to post dire financial reports, indicating a potential switch of CEO in early 2013.

Losing Elop, however, could scupper Microsoft’s attempts to acquire Nokia. Elop is pro-Microsoft and this would obviously carry a lot of favourable weight in the boardroom should Microsoft put the offer on the table.

‘Microsoft needs to act fast if it wants to get Nokia. It will need Elop to push the deal though. If Elop goes the Nokia board will likely appoint Finnish-born chief executive office that would likely appose such action,’ Jeronimo explained.

Google’s acquisition of Motorola showed it is possible for predominantly software-oriented firms to buyout their hardware partners. It also showed us the reasoning – when Google acquired Motorola it got everything: the ailing smartphone business and, most importantly, its wealth of standard essential patents.

Standard essential patents are invaluable. Google knows this and so does Microsoft. That’s why a buyout of Nokia by Microsoft makes so much sense – the former owns a war chest packed with essential patents. Having access to these patents, as well as Nokia’s supply chain, would be invaluable to Microsoft and its Windows Phone campaign.