On paper, it appears to be a natural marriage. The $7-billion acquisition puts Microsoft’s mobile capabilities high above that of Google’s, and within striking distance of Apple itself.

Microsoft is receiving a top-notch product line, and proven access channels to global markets. Nokia, on the other hand, is getting the lifeline it has been searching for the last few years. By themselves, they have floundered in the mobile space. Yet, it is possible that together they may have the mojo to build a compelling offering.

In hindsight, it was clear that Nokia was being groomed for this acquisition; today’s exchange of cash just legitimizes it.

What then is amiss? Why does the transaction feel almost bitter-sweet? For one, Nokia has lost nearly 85 per cent of its market value under former CEO Stephen Elop while Microsoft is paying less than half of Nokia’s market value for the deal.

On top of this, Mr. Elop gets to continue running the business. Indeed, it seems as if Mr. Elop’s job at Nokia was to destroy the company’s market value so that Microsoft could pick it up for a song. The disgruntled Finnish media has stopped short of calling this a criminal offence.

Does it not seem ridiculous that the Nokia board honestly believes that Microsoft has the right strategy to succeed in the mobile space despite the fact that it was Microsoft’s failed strategy and partnership with Nokia that sealed the Finnish handset maker’s downward spiral?

The acquisition seems all the more incredulous when one takes into account the fact that Microsoft’s two-year old alliance with Nokia already gave them one of the best supply chain and distribution network set-ups in the world. In essence, Microsoft has already received most of the benefits of the acquisition without the hefty $7 billion charge.

Why an acquisition then, and why now? There are three possible answers, and all of them do not point to this being a well-thought out plan. One, which is most likely, Nokia was heading towards bankruptcy, and threatening to go under— a move that would have made Microsoft forfeit the smartphone race. Two, Nokia’s board had enough of the company’s Windows Mobile strategy, and was threatening to jump ship to Android. Three, Microsoft wants to use Nokia’s resources for other hardware projects but wanted to avoid the embarrassment of slowly slicing Nokia up. None of these truly point towards “great synergies” or a smart acquisition plan.

Nevertheless, in other news, the odds on Stephen Elop becoming the next Microsoft CEO have jumped through the roof. Surely, there is nothing dodgy there, right?

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