Steve Ballmer, chief executive officer of Microsoft Corp., right, reacts while holding the Nokia Lumia 920 smartphone with Stephen Elop, chief executive officer of Nokia Oyj, at a news conference in Moscow on Nov. 6, 2012. Photographer: Alexander Zemlianichenko Jr./Bloomberg
Microsoft Corp. agreed to pay 5.44 billion euros ($7.2 billion) for Nokia Oyj's devices business and license patents as the Finnish company, once the biggest maker of mobile phones, struggles to maintain market share.
The deal includes paying 3.79 billion euros for the devices unit and 1.65 billion euros for patents, the companies said in a statement today. Nokia Chief Executive Officer Stephen Elop will step aside to return to Microsoft, they said.
Nokia is coping with cash-flow challenges stemming from weaker demand as its phones lose share to devices from Apple Inc. and handsets using Google Inc.'s Android operating system. Elop has cut more than 20,000 jobs and suspended the company's dividend in January in an attempt to improve its finances.
"After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders," Chairman Risto Siilasmaa said in a statement.
Siilasmaa will become interim CEO of Nokia.
Nokia reported in July a 27 percent drop in the number of handsets sold in the second quarter. It's lost more than 5 billion euros in nine quarters.
Redmond, Washington-based Microsoft has battled to stay relevant as consumers have shifted from using its core Windows software for PCs toward mobile devices from Apple and others. Facebook Inc. and Google have also pushed ahead in social networking and online advertising, areas where Microsoft remains weak.