Microsoft Sheds Low-End Mobile Phone Business

By | May 18, 2016

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Two years after Microsoft ( MSFT ) purchased Nokia ‘s ( NOK ) mobile phone unit, the software giant is moving to exit Nokia’s entry-level feature phone business. Microsoft announced Wednesday that it is selling the business for $350 million to FIH Mobile, a Hong Kong-listed subsidiary of Taiwan-based contract manufacturer Foxconn, and HMD Global, a newly created company in Finland that has licensed Nokia’s brand and intellectual property . Microsoft said it will continue to develop Windows smartphones, such as its Lumia devices, and will continue to support third-party handsets from partners like Acer, Alcatel, HP Inc. ( HPQ ), Trinity and Vaio. Feature phones are low-end devices that have limited capabilities compared with full-fledged smartphones. Feature phones are targeted mostly at customers in emerging markets. Microsoft bought the Nokia handset business in April 2014 for $7.5 billion, a deal negotiated by Microsoft’s previous CEO, Steve Ballmer, in September 2013. Microsoft wrote off the entire value of the deal in July 2015 when it recorded an impairment charge of $7.6 billion related to the Nokia assets. “Microsoft’s exit from the feature phone business is not at all surprising,” IHS analysts Ian Fogg and Daniel Gleeson said in a research report Wednesday. “The deal again highlights Microsoft’s continued failure in mobile.” Microsoft’s smartphone future is “up in the air” because the company hasn’t released any new flagship handsets for Windows 10 Mobile in a while, they said. Microsoft shipped just 2.3 million smartphones in the first quarter, down 70% from Q1 2015, IHS said. “Realistically Microsoft can hope to be no more than a bit player in the mobile phone market now,” Fogg and Gleeson said. The smartphone market is dominated by Apple ‘s ( AAPL ) iPhone and Android-based devices from Samsung and others. Microsoft stock was up a fraction in morning trading in the stock market today , near 51, but trading below its 50-day line since its earnings release late last month disappointed. Scalper1 News

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