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September 3, 2013

Microsoft shares tumble on $7.2B Nokia phone deal

HELSINKI — Microsoft is wagering $7.2 billion on the idea that owning Nokia’s phone business will help the software giant grab a bigger slice of the lucrative mobile market from Apple and Google.

The Windows maker is buying Nokia Corp.’s line-up of smartphones and a portfolio of patents and services. The 5.44 billion euros ($7.2 billion) deal, announced late Monday, marks a major step in the company’s push to transform itself from a software maker focused on desktop and laptop computers into a  more versatile and nimble company that delivers services on any kind of Internet-connected gadget.

But some analysts questioned whether buying up the mobile business of Nokia, the fading star of the cellphone world, would aid Microsoft.

“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,” said Janney analysts Yun Kim and Alice Hur. “We do not believe the planned acquisition of (Nokia’s) mobile business changes (Microsoft’s) strategic positioning in the smartphone market.”

Microsoft’s shares fell $2.05, or 6.1 percent, to $31.35 in midday trading in the U.S.

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