Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Microsoft Corporation (MSFT)’s Transformation Deepens Through Nokia Corporation (ADR) (NOK)

Microsoft Corporation (NASDAQ:MSFT) has once again made the headlines today. The reason behind this is the recently announced purchase of Nokia Corporation (ADR) (NYSE:NOK)‘s Devices & Services business -and some licenses for patents- for approximately $7.2 billion. This is certainly one big step ahead in Microsoft’s transformation into a devices and services company. Also as a part of this conversion process, Steve Ballmer (Microsoft’s CEO), announced his retirement a few weeks ago. Ballmer stated that this decision stemmed on the necessity of having one CEO along the whole renovation.

Microsoft Corporation (NASDAQ:MSFT)

Although the transformation and Ballmer’s departure seem promising to some analysts, near-term uncertainties remain, and this was certainly reflected on Microsoft’s stock price. The shares were down about 5% today, September 3rd, exposing the concerns on the investors’ side.

The acquisition will further pressure Microsoft Corporation (NASDAQ:MSFT)’s margins and strongly limit the company’s free cash availability. By adding 32 thousand employees on top of Microsoft’s current 99 thousand, the firm’s cost structure will be considerably altered. The investment has also led analysts to discard the possibility of an accelerated stock repurchase plan, which many expected to be announced on September 19th.

Many shareholders are also worried by Microsoft Corporation (NASDAQ:MSFT)´s further commitment with its hardware segment, which has been pretty unsuccessful in the past. Acquiring a struggling company that sold about 25% less units in the second quarter of 2013 compared to the year-ago period, is certainly not reassuring.

Furthermore, it looks like Microsoft Corporation (NASDAQ:MSFT) is arriving, once more, late to the party. The company seems to be imitating what Apple has been doing for quite some time now: integrating the production of devices and operative systems. With a head start, Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) pose a strong competition.

Results are highly dependent on execution, but the Nokia Corporation (ADR)(NYSE:NOK) acquisition bodes well for Microsoft Corporation (NASDAQ:MSFT)’s long-term prospects, especially as Windows Phones gain market share in important geographies such as urban China and France. In a late Monday interview, Mr. Ballmer said that “because Nokia and Microsoft already work so closely together, it should be a ´smooth transition´ to integrate Nokia Corporation (ADR) (NYSE:NOK)’s mobile business into Microsoft.”  Meanwhile, an attractive valuation and increasing pressures for stockholder returns could ameliorate the risk profile.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!