7 ms·

So MS Bought Nokia and ~30k employees for ~$7.2 billion last April. 3 months later, MS may now be firing ~half of the Nokia group. The executives who drove tha

• untog 12y ago
  Is there any large acquisition that succeeded in the last 10 years? You might have the wrong criteria for acquisition success. I'm sure both Nokia and MS knew these layoffs would come before they agreed to the purchase.
  • roc 12y ago
    I'm sure Nokia itself knew these layoffs were likely-to-inevitable whether that deal happened or not.
    • at-fates-hands 12y ago
      If that was the case, do you think most of the Nokia employees were actively looking for another job and were just riding the gravy train until it finally pulled into the station? I would think if I worked at Nokia and we were acquired by Microsoft, I'd probably be looking for another job fairly quickly. Considering the writing was on the wall for a while even before they were acquired by MS.
      • cpeterso 12y ago
        If they weren't before, they will be now that Microsoft's layoffs over the next six months hang over everyone's heads. Microsoft should have ripped the bandaid off in one quick move so other employees will feel secure.
      • dredmorbius 12y ago
        That will largely depend on the severance packages. Those who stuck around through the merger and take take the first-round cuts offer will likely make out pretty well. Unfortunately for Microsoft, this means that they're largely paying for people with good strategic skills and a high capacity to find work elsewhere to leave. It's the ones who stay put, largely out of lack of strategic skills and/or alternative options, who are going to be less valuable to the company. There may be further incentives but they're likely to not be as generous. Or so say the rational expectations theorists.
  • pierreio 12y ago
    Did MS? Including the cost of the lay off ($1.6b says Recode), Nokia price was actually $8.8b. What was their business case that was so easily scrapped just months into the purchase? It may be successful on a tax/accounting perspective since the purchase was made in € with cash that couldn't be brought to the US. Yet this does look like a gigantic waste of assets. Warren Buffett says that a successful business is all about mindfully allocating its resources. This looks like the oppsite - no wonder that Nadella has a hard time explaining what happens in simple words.
    • DelwinAmber 12y ago
      It can be argued that their patent portfolio was worth about that much.
      • bergie 12y ago
        Except that Microsoft didn't get the Nokia patents, merely a license to use them. http://www.reuters.com/article/2013/09/03/us-nokia-microsoft-patents-idUSBRE9820ZZ20130903 http://www.reuters.com/article/2013/09/03/us-nokia-microsoft...
    • wes-exp 12y ago
      Don't underestimate the value of the Nokia brand. Until recently, IIRC, Nokia was the world's largest seller of mobile phones. That brand image is worth a ton to help MS sell its phones.
      • gr3yh47 12y ago
        Right up until they went windows phone only. The result is nokia's sales dropping, not windows phone sales increasing.
        • genericuser 12y ago
          Coincided with yes, but saying it was the result of is making a fault with logic as I am sure you are aware.
  • bpyne 12y ago
    Success is highly subjective. Perhaps you mean different?
• smackfu 12y ago
  Depends on the viewpoint: When you acquire a company, are the employees assets or liabilities?
  • hyperliner 12y ago
    Who? The engineers? Clearly many of them would be liabilities as their product lost. Some visionaries are needed, some business people, some engineering leaders, some bright engineers, etc. Unfortunately, some acquisitions are for talent, others for revenue, others for customers, others for technology, or a mix, and the talent here may be a mix bag.
• sz4kerto 12y ago
  > Is there any large acquisition that succeeded in the last 10 years? Yes, many. Think of the Lenovo-IBM deal -- massive success. The Facebook-Whatsapp deal is 2.5x bigger than this acquisition, we'll see how that works out (financially). Google-Youtube is a big one that can be considered as a big success as well. Ebay-Paypal. FB-Instagram.
  • madengr 12y ago
    Bigger in terms of inflated stock prices, but not by head count. Lenovo has taken the Thinkpad line down the toilet, not that IBM wouldn't have.
    • vgharl 12y ago
      > Lenovo has taken the Thinkpad line down the toilet I think you're overstating things tremendously here. ThinkPad is alive, and from the reviews I've seen, doing well. http://www.engadget.com/2014/03/28/lenovo-thinkpad-x1-carbon-review-2014/ http://www.engadget.com/2014/03/28/lenovo-thinkpad-x1-carbon.... Many buyouts end with entire products being canned. I still have an IBM ThinkPad. They were good quality back then, but I really think the standard-bearer today is MacBook.
      • philsnow 12y ago
        I don't think madengr is saying that the thinkpad line is not successful. Rather, I bet he means that the modern thinkpads do not fit in with the "thinkpad spirit". New thinkpads are just like every other manufacturer's laptops, even the X line.
  • Thaxll 12y ago
    Facebook-Whatsapp are you serious?
    • nkozyra 12y ago
      One of these things is not like the others.
• Yrlec 12y ago
  Usually one of the main reasons you do M&A is that there are redundancies between the organizations. Therefore, being able to lay people off while maintaining the same output is one of the goals of the deal, not a sign of failure.
  • chris_mahan 12y ago
    Ah, perhaps if you're the MBA bean counter type. In reality, you should grow the business, because now you have much better back-office capabilities to support a more distributed, more diverse workforce. Don't be afraid of having lots of people, be afraid of not managing (supporting) them well, causing inefficiency.
    • Aloha 12y ago
      There is a whole lot of overlapping administravia, you don't need 2 full sized legal departments, finance groups, HR group, marketing groups, sales groups and so on. Some layoffs will happen.
    • smtddr 12y ago
      You cannot merge 2 huge companies without significant layoffs; there are way too many overlapping job-responsibilities and it's impractical to somehow make that work. Maybe some kind of rare exception is a job that depends on physical location. If I already own a fleet ice-cream trunks in USA and I buy a company in Paris, I'm probably not going to layoff the paris ice-cream truck drivers...
• outside1234 12y ago
  It can get worse. MS could be firing the whole team and not just 50%. This is the reality that Blackberry faces.
• dragonwriter 12y ago
  > Is there any large acquisition that succeeded in the last 10 years? Lots. Of course, success is relative to for whom -- many of them work out well for shareholders of the acquired firm, many work out okay for shareholders of the acquiring firm, and the executives on both sides usually do well. Of course, part of how it works out for those groups is that it, by design, doesn't work out well for the "human resources" that are production inputs.
• incision 12y ago
  >'So MS Bought Nokia and ~30k employees for ~$7.2 billion last April. 3 months later, MS may now be firing ~half of the Nokia group. The executives who drove that catastrophic deal stay.' My understanding, primarily from friends at Cisco which has its own history of acquisitions and layoffs is that this is roughly standard procedure, catastrophe or not. Basically, there's always going to be a lot of overlap when acquiring another large company. Loads of people are made completely redundant and things that didn't come out via diligence are discovered. There's a wait and see period where some people leave, followed by jockeying for position and finally layoffs of people who remain redundant and/or lacked the awareness to pursue either of the former two options. Obviously, a merger which doesn't pan out would amplify the effect. What I wonder is how much such a process actually affects the success of these mergers? Do the consultants and banks who assist in these sort of things have a variable to account the back-biting scramble that will take place in each first year?
  • kyrra 12y ago
    Cisco does buy a lot of companies, but only about as many as google has bought. Though Cisco has has more billion $ or higher deals. http://en.wikipedia.org/wiki/List_of_acquisitions_by_Cisco_Systems http://en.wikipedia.org/wiki/List_of_acquisitions_by_Cisco_S... http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Google http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...
    • tptacek 12y ago
      Cisco has a very different M&A strategy than Google. They add product lines through acquisition, in preference to building internally (if you're on a Cisco team and you're ever given an MRD for a product, the joke goes, quit and start a company to do it instead). As often as not, Google acquires companies to absorb the people. Google typically buys much smaller companies, and more selectively. I would be very surprised to discover that Google has acquired close to as many headcount as Cisco has. But I don't want to do the research work either. :)
      • ersii 12y ago
• sirkneeland 12y ago
  While I am no fan of the deal (to say the least), Nokia would have had to make these deep cuts independently based on the continued inability of Windows Phone to sell enough to support a company of Nokia's size.
• hyperliner 12y ago
  I think the best way to say the above is not that "Microsoft lays off half of Nokia group." It should instead be "Microsoft saves half of Nokia's employees jobs."
• mynegation 12y ago
  The situation is almost reverse in smaller scale companies. It is not unusual for a mid-sized company to acquire another mid-sized or small company, keep the factory workers, engineering, R&D and lay off all mid and senior management (though with pretty good severance usually) to install their own people.
• pistle 12y ago
  Your logic and worldview are all inverted. You buy ailing companies and then cut fat. That's the plan, not evidence of a bad decision. What was happening to Nokia WITHOUT getting bought and gutted? They were in a tailspin and had major internal friction issues getting good tech to the top of the consumer heap. They would be another Blackberry... Oh wait, you also suggest Blackberry fight it out with their wet noodle of a product line? As an employee, when you are acquired, you either are indispensable (and will not be made redundant) or you should probably head for the door so you aren't competing with your coworkers for spots when a flood of you are dumped into the market. Microsoft got the products, IP, licensing deals and will be keeping a block of very productive employees. This is an obvious move and good for MS, MS shareholders, and, indirectly, consumers.
• bluedino 12y ago
  >> I'd feel sorry if I was a Nokia guy there, they pulled out the best non-Apple phone hardware in the last years. They have almost no marketshare in the US. So is it really the best non-Apple hardware, or does being the best not really even matter?
  • ladzoppelin 12y ago
    That could be changing and the US is not the only market that matters. There is a reason Google, Tinder and other companies deny perfectly working apps on the Windows ecosystem and its not because Windows phone is irrelevant.
• ape4 12y ago
  I hope the ex-Nokia people start a phone company.
  • k_a 12y ago
    ehm... http://jolla.com http://jolla.com
• cwyers 12y ago
  I think that "we can run this unprofitable business with half its current headcount, thus turning it into a profitable business" is hardly an indication of failure.
  • TheOtherHobbes 12y ago
    You're assuming the unprofitable business will become profitable. Businesses are never unprofitable because they have too many employees. Businesses are unprofitable when management lacks the skills, the foresight, or the vision to make those employees profitable. Edit: If this isn't obvious consider what a world-class entrepreneur could do with 12,000 experienced employees, a couple of billion in severance savings, and a kick-ass idea.
    • asuffield 12y ago
      What can you do with 12,000 employees with minimal experience and skills who have been working on a long-standing but now obsolete product line that was manpower intensive, when your business is being completely realigned around other product lines that still make a profit but rely on small numbers of highly experienced staff? This is not a random question; this company exists.
• clarky07 12y ago
  You seem to not understand how mergers and acquisitions work. There are generally large redundancies which is part of the reason for the deal. Get rid of payroll while maintaining the same total output. Also, a major reason for buying Nokia had to be it's IP. I don't think this is any way a sign the deal failed, and I'm sure it was expected by all of the executives and most of the employees.
• tomkarlo 12y ago
  It doesn't make sense for a company that's trying to sell itself to also start making large cuts - it may drive your own price down by signaling that your businesses lack potential. The acquiring company will calculate in the cost (and savings) from the cuts ("synergies", to use the banking term) and just roll them into the purchase price. So if you're the selling CEO / board, you get to claim you sold the company whole, and if you're the buyer, you just blame the cuts on the increased efficiencies to be gained from combining the companies - it's a sign that the deal is "successful" and you're achieving the synergies you modeled before the purchase.
• badman_ting 12y ago
  Very strange comment, I'm sure execs expected all of this when the deal was done. Their expected outcome probably does not look "catastrophic" to them. Actually, I would say that by the time the deal rolled around the catastrophe had already played itself out at Nokia. It's sad what happened to Nokia, but the acquisition is the least of it.
• snowwrestler 12y ago
  The whole point of M&A is too eliminate redundancies in the acquired company, so you can drive the same aggregate revenue with lower aggregate costs. Layoffs are not a sign of M&A failure, they are at least neutral, and might be a sign of success. edit: clarifying language