Microsoft Corporation (MSFT), Nokia Corporation (ADR) (NOK), BlackBerry Ltd (BBRY): Smartphone Market Moves?

Microsoft Corporation (NASDAQ:MSFT) certainly could not allow a holiday weekend to go by without making some headlines. Nokia Corporation (ADR) (NYSE:NOK) was not exactly publicly on the market, unlike its No. 3 smartphone competitor, BlackBerry Ltd (NASDAQ:BBRY) – which made its intents to sell public a couple of weeks ago. And with Nokia handsets running the Windows Phone operating system and taking over the third-place spot in the smartphone marketplace, the Microsoft deal is major in terms of money, but what it means in the long-term for the smartphone wars remains to be seen.

And what might this kind of deal mean for a company like BlackBerry Ltd (NASDAQ:BBRY)? Let’s take a look at what is happening in the news Tuesday, in the hours after this large Microsoft Corporation (NASDAQ:MSFT) investment in hardware with Nokia Corporation (ADR) (NYSE:NOK).

Stephen Elop & Steve Ballmer

The Deal of the Year: Nokia Corporation (ADR) (NOK) Up, Microsoft Corporation (MSFT) Down?

This is certainly quite the news to get the stock market moving after a slow trading week and a three-day weekend. It was announced late Monday night – and reported by Ashlee Vance of Bloomberg BusinessWeek – that Microsoft Corporation (NASDAQ:MSFT) had reached an agreement to buy the devices and services division of Nokia Corporation (ADR) (NYSE:NOK) and the patent portfolio for about $7.2 billion, with the deal expected to be closed early in 2014. The deal was nearly 60 percent of the total U.S. market cap for Nokia entering Tuesday trading.

Just past noon Eastern Tuesday, Nokia Corporation (ADR) (NYSE:NOK) stock was up nearly 30 percent to north of $5 a share, to the satisfaction of fund manager Ken Griffin. Meanwhile, Microsoft stock has slipped more than 6 percent to about $31.40 a share, to the chagrin of fund manager Jim Chanos. With the deal, Microsoft Corporation (NASDAQ:MSFT) will take over the smartphone and tablet hardware business of Nokia, which has been developing a fresh new stable of devices that incorporate the Windows Phone OS. Not only that, but the deal also includes a 10-year license of Nokia’s robust patent portfolio, which had been valued at about $2 billion to $3 billion.

With Microsoft now seizing control of the Nokia handsets to basically have full control over creating the hardware that will work best and most intuitively with the Windows Phone OS, there are some morning-after questions from analysts as to whether outgoing CEO Steve Ballmer made a wise move. Janney analysts Yun Kim and Alice Hur wrote in a research note early Tuesday, “Until there are signs that (Microsoft) can innovate and successfully execute in the post-PC era, we expect the stock to languish at current levels … We do not believe the planned acquisition of (Nokia’s) mobile business changes (Microsoft’s) strategic positioning in the smartphone market.”

There may also be some questions regarding Nokia Corporation (ADR) (NYSE:NOK) CEO Stephen Elop, who stepped down as CEO to return to Microsoft Corporation (NASDAQ:MSFT) as senior VP in charge of Nokia devices and services. How might the market respond to the speculation that Elop may be a top candidate to replace the retiring Ballmer? Stay tuned, but Elop’s tenure as CEO at Nokia was rocky at best. However, the work did help Nokia overtake BlackBerry Ltd (NASDAQ:BBRY) as the No. 3 handset choice behind Samsung and Apple Inc. (NASDAQ:AAPL) – even after BlackBerry launched a revitalized set of devices and a new operating system.

So What About BlackBerry Ltd (BBRY) and Its ‘For Sale’ Sign?

In response to the deal, Nokia is spiking and Microsoft is sinking, but tangentially related BlackBerry Ltd (NASDAQ:BBRY), which has been publicly on the selling block for a couple of weeks now, is seeing its stock rise in response – based on some speculation that some kind of deal just might be coming soon after Microsoft Corporation (NASDAQ:MSFT) has now tipped its hand. Euan Rocha of MSN Money looked into the future of BlackBerry and CEO Thorsten Heins in the wake of the Microsot-Nokia deal.

BlackBerry Ltd (NASDAQ:BBRY) stock rose Tuesday as talk about a potential buyer has been sparked again with the Nokia deal. Though BlackBerry market share continues to drop, there is optimism that a buyer will be found  considering the company’s state-of-the-art security features, its hardware and its messaging software along with portfolios should make  the company more attractive now that Nokia is off the market.

However, James Cordwell, an analyst at Atlantic Equities, says that the makeup of BlackBerry Ltd (NASDAQ:BBRY) means that a Microsoft Corporation (NASDAQ:MSFT)-Nokia Corporation (ADR) (NYSE:NOK) deal may not mean that BlackBerry will be easily scooped up now. Cordwell wrote, ”Nokia was already using the Microsoft’s Windows platform, so integration-wise it is relatively straightforward. Whereas if anyone acquires BlackBerry, they will be acquiring it more for its network infrastructure and patent assets, as opposed to its handset business, so it will be a very differently driven deal.”

What are your thoughts? In the wake of this most recent acquisition, do you think BlackBerry Ltd (NASDAQ:BBRY) will be bought sooner rather than later? If so, who do you think are the top possible suitors for the company?

DISCLOSURE: None

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