$4, or about $15B for Devices and Services isn't difficult to imagine. If the WSJ sources are legit, I think talks were around $4 for Devices and Services.
-Growth guidance to deliver at or better
-Restructuring charges to complete
-MSFT already has 10% of that into NOK
-Devices and Services includes patent portfolio
-MSFT uses off-shore $66B cash for the deal
This is a great deal for MSFT. They could just spin off Mobile Devices now that Vietnam is up and running to reduce overall cost of the acquisition. It's also a sucker-punch deal for Nokia, now that profitability and growth is achievable. Either Nokia wanted $10+, or would not include patents in the deal.
If Nokia sold Devices and Services to MSFT for $4, it would basically turn Nokia into NSN, with $0.20-0.25/sh annual earnings and upwards of $1/sh annual cash flow, with about $0.25 in debt. If half of NSN is valued at $2 today, and about $2 in free cash, then the $4 Devices and Services deal puts NSN at $8 overnight and deserving of a new earnings multiple.
when the convertibles hit to cover the short interest, it really turns into $1.25ps for devices, $.40 for using the patents for 10 years
& the guy who wrote the burning platform speech & assassinated a OS while it was growing market share, snuck out the back door & is now sitting at balmers desk
.....eh, ...maybe something is wrong with the deal
guess there ARE some hurdles, Finnish Gov, EU regulators & of course shareholder vote
sad but old shareholders got screwed & new ones likely to want to see $7.5 after all the dust clears
might be better to sell them nsn instead. you know, like google doing high speed fiber? only much, much, much bigger!
consumers don't seem to like the newer phone o.s.es. wm5 was popular, 6 started the slide, 7 took them to new lows. 8 is increasing very slowly while lg moves to #3 in smartphones. so handsets might not be the best move for msft.
i think carriers won't reject them as badly. and they can get away with things that won't work out in full public view such as the handset business.
Take a look at market cap of Ericsson. Profitability of NSN is better now and based on future contracts the difference will increase. As of now, total revenue of Ericsson is better even though profitability is not.
According to GS, today the NSN portion of NOK is worth $2/sh.
Nokia has about $2 in free cash.
A $4 Devices buyout brings us to $8 total.
$8x3700shares = 29.6B. See? Not so hard.
See, when a company buys another company, they have to pay money for it.
Very interesting assessment Thermo. What is your take on the next phase of this? Do you think a take out offer could come from someone other than MSFT for devices and services that will pressure them to rebid? It seems that NOK has a for sale sign up at this point don't they?
The fact that Mr. Elop is willing to unload Devices and Services from Nokia is blowing my mind. Here's what I am thinking-
If MSFT pays, then Siemens wants more from Nokia for NSN.
I believe some sort of deal Nokia was working with Siemens fell apart, MSFT had to back out, and some executive lamented a comment off the cuff about the deal going sour to a WSJ reporter at the bar.
My thought process is Nokia's future will be what NSN is becomming. Not devices. How can you short this stock? Even a $2 offer puts NOK at $6 over night with earnings adjustments galore.
Apparently this morning MSFT was never in talks looking at the market. How do we lose a 4% after hours move? Nokia could unload, or get caught in talks to unload the Devices and Services segment, pushing NOK to $6 minimum instantly!