Nokia Sold Its Phone Business for €5.44 Billion and Kept Going

On May 12, 1865, a mining engineer named Fredrik Idestam set up a wood pulp mill on the Tammerkoski rapids in Tampere, in Finland, which was then part of the Russian Empire. In 1868 he built a second mill near the town of Nokia, on the Nokianvirta river, where the water gave better power. In 1871 he and his friend Leo Mechelin, a statesman, turned the business into a company and named it after the second site: Nokia Ab.

For a century Nokia had little to do with telephones. Finnish Rubber Works and Finnish Cable Works, which had been jointly owned with Nokia since 1922, merged with it in 1967. The new Nokia Corporation made paper goods, car and bicycle tires, rubber boots, communications cables and televisions.

1992: Sell everything else

By the early 1990s the conglomerate was losing money. In 1992 Jorma Ollila, a former banker who had run the mobile phone division, was made CEO and asked for a plan to survive. Time later reported that he shed the rubber, paper and other businesses and bet the company on wireless. He had already backed GSM, the new European digital standard.

It worked quickly. In 1998 Nokia passed Motorola to become the world’s largest maker of mobile phones. Time put its share of the world market at about 30%, most of it in GSM phones.

The money followed. Nokia’s sales in 1999 were €19.77 billion, up 48%, and by early 2000 it was the largest listed company in Europe, with a stock market value of €223 billion, CNN Money reported.

2011: The burning platform

The threat came from software. Apple’s iPhone arrived in 2007 and Google’s Android soon after. In 2010 Nokia hired Stephen Elop, a Microsoft executive, as its CEO.

On February 8, 2011, Engadget published an internal memo from Elop to employees. He compared Nokia to a man standing on a burning oil platform in the North Sea and wrote: “Nokia, our platform is burning.” He said the company still had no product close to the iPhone experience, and that Android had just overtaken Nokia in smartphone volumes.

Three days later Nokia announced it would make Microsoft’s Windows Phone the main software for its smartphones. The Lumia phones that followed did not reverse the decline.

€5.44 billion

On September 3, 2013, Nokia agreed to sell substantially all of its Devices & Services business to Microsoft for €5.44 billion in cash. Of that, €3.79 billion was for the business and €1.65 billion for a ten-year license to Nokia’s patents. The business being sold had generated an estimated €14.9 billion in sales in 2012, almost half of Nokia’s total. About 32,000 employees were expected to move to Microsoft.

The deal closed in April 2014. It did not go well for the buyer. In July 2015 Microsoft announced an impairment charge of $7.6 billion on the business, more than the roughly $7.2 billion it had paid, and up to 7,800 more job cuts, mostly in phones. About half of the 25,000 Nokia employees who had moved over had already been laid off the year before, PCWorld reported.

The company that was left

Nokia kept its network equipment business, its maps and its patents. In 2015 it agreed to buy Alcatel-Lucent, the French telecoms equipment maker, in a deal worth €15.6 billion that it completed in 2016.

Today Nokia sells network equipment to phone companies and data centers and licenses its patents. In 2025 its net sales were €19.89 billion, up 3%, with comparable operating profit, which excludes one-off items, of about €2 billion. Those sales are almost exactly what Nokia sold in 1999, at the height of its phone business.

What the record shows

• Selling the famous part can save the rest. Nokia sold the phones, kept the networks and patents, and survived.
• The buyer can be the one who loses. Microsoft paid about $7.2 billion and took a $7.6 billion charge on the business about a year after the deal closed.
• Seeing the problem is not the same as solving it. Elop’s memo described Nokia’s position bluntly; the strategy that followed did not save the phone business.
• It had reinvented itself before. Pulp, rubber and cables gave way to phones in the 1990s, and phones gave way to networks after 2013.

Other famous sales in this archive turned out very differently for the buyers. Facebook paid $1 billion for Instagram, and Google paid $1.65 billion for YouTube. In 2003, Lego also had to cut back to its core to survive.