Nokia - Company Announcement

Microsoft to acquire Nokia’s Devices & Services business, license Nokia’s patents and mapping services

Nokia Corporation
Stock Exchange Release
September 3, 2013 at 06.00 (CET +1)

REDMOND, Washington and ESPOO, Finland - Microsoft Corporation and Nokia
Corporation today announced that the Boards of Directors for both companies
have decided to enter into a transaction whereby Microsoft will purchase
substantially all of Nokia's Devices & Services business, license Nokia's
patents, and license and use Nokia's mapping services. 

Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to
purchase substantially all of Nokia's Devices & Services business, and EUR 1.65
billion to license Nokia's patents, for a total transaction price of EUR 5.44
billion in cash. Microsoft will draw upon its overseas cash resources to fund
the transaction. The transaction is expected to close in the first quarter of
2014, subject to approval by Nokia's shareholders, regulatory approvals and
other closing conditions. 

Building on the partnership with Nokia announced in February 2011 and the
increasing success of Nokia's Lumia smartphones, Microsoft aims to accelerate
the growth of its share and profit in mobile devices through faster innovation,
increased synergies, and unified branding and marketing. For Nokia, this
transaction is expected to be significantly accretive to earnings, strengthen
its financial position, and provide a solid basis for future investment in its
continuing businesses. 

“It's a bold step into the future - a win-win for employees, shareholders and
consumers of both companies. Bringing these great teams together will
accelerate Microsoft's share and profits in phones, and strengthen the overall
opportunities for both Microsoft and our partners across our entire family of
devices and services,” said Steve Ballmer, Microsoft chief executive officer.
“In addition to their innovation and strength in phones at all price points,
Nokia brings proven capability and talent in critical areas such as hardware
design and engineering, supply chain and manufacturing management, and hardware
sales, marketing and distribution.” 

“We are excited and honored to be bringing Nokia's incredible people,
technologies and assets into our Microsoft family. Given our long partnership
with Nokia and the many key Nokia leaders that are joining Microsoft, we
anticipate a smooth transition and great execution,” Ballmer said. “With
ongoing share growth and the synergies across marketing, branding and
advertising, we expect this acquisition to be accretive to our adjusted
earnings per share starting in FY15, and we see significant long-term revenue
and profit opportunities for our shareholders.” 

“For Nokia, this is an important moment of reinvention and from a position of
financial strength, we can build our next chapter,” said Risto Siilasmaa,
Chairman of the Nokia Board of Directors and, following today's announcement,
Nokia Interim CEO. “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.
Additionally, the deal offers future opportunities for many Nokia employees as
part of a company with the strategy, financial resources and determination to
succeed in the mobile space.” 

“Building on our successful partnership, we can now bring together the best of
Microsoft's software engineering with the best of Nokia's product engineering,
award-winning design, and global sales, marketing and manufacturing,” said
Stephen Elop, who following today's announcement is stepping aside as Nokia
President and CEO to become Nokia Executive Vice President of Devices &
Services. “With this combination of talented people, we have the opportunity to
accelerate the current momentum and cutting-edge innovation of both our smart
devices and mobile phone products.” 

Nokia has outlined its expected focus upon the closing of the transaction in a
separate press release published today. 

TERMS OF THE AGREEMENT

Under the terms of the agreement, Microsoft will acquire substantially all of
Nokia's Devices and Services business, including the Mobile Phones and Smart
Devices business units as well as an industry-leading design team, operations
including all Nokia Devices & Services-related production facilities, Devices &
Services-related sales and marketing activities, and related support functions.
At closing, approximately 32,000 people are expected to transfer to Microsoft,
including 4,700 people in Finland and 18,300 employees directly involved in
manufacturing, assembly and packaging of products worldwide. The operations
that are planned to be transferred to Microsoft generated an estimated EUR 14.9
billion, or almost 50 percent of Nokia's net sales for the full year 2012. 

Microsoft is acquiring Nokia's Smart Devices business unit, including the Lumia
brand and products. Lumia handsets have won numerous awards and have grown in
sales in each of the last three quarters, with sales reaching 7.4 million units
in the second quarter of 2013. 

As part of the transaction, Nokia is assigning to Microsoft its long-term
patent licensing agreement with Qualcomm, as well as other licensing
agreements. 

Microsoft is also acquiring Nokia's Mobile Phones business unit, which serves
hundreds of millions of customers worldwide, and had sales of 53.7 million
units in the second quarter of 2013. Microsoft will acquire the Asha brand and
will license the Nokia brand for use with current Nokia mobile phone products.
Nokia will continue to own and manage the Nokia brand. This element provides
Microsoft with the opportunity to extend its service offerings to a far wider
group around the world while allowing Nokia's mobile phones to serve as an
on-ramp to Windows Phone. 

Nokia will retain its patent portfolio and will grant Microsoft a 10-year
non-exclusive license to its patents at the time of the closing. Microsoft will
grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In
addition, Nokia will grant Microsoft an option to extend this mutual patent
agreement in perpetuity. 

In addition, Microsoft will become a strategic licensee of the HERE platform,
and will separately pay Nokia for a four-year license. 

Microsoft will also immediately make available to Nokia EUR 1.5 billion of
financing in the form of three EUR 500 million tranches of convertible notes
that Microsoft would fund from overseas resources. If Nokia decides to draw
down on this financing option, Nokia would pay back these notes to Microsoft
from the proceeds of the deal upon closing. The financing is not conditional on
the transaction closing. 

Microsoft also announced that it has selected Finland as the home for a new
data center that will serve Microsoft consumers in Europe. The company said it
would invest more than a quarter-billion dollars in capital and operation of
the new data center over the next few years, with the potential for further
expansion over time. 

NOKIA LEADERSHIP CHANGES

Nokia expects that Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen,
and Chris Weber would transfer to Microsoft at the anticipated closing of the
transaction. Nokia has outlined these changes in more detail in a separate
release issued today. 

EXTRAORDINARY SHAREHOLDERS MEETING

Nokia plans to hold an Extraordinary General Meeting on November 19, 2013. The
notice of the meeting and more information on the transaction and its
background are planned to be published later this month. 

PRESS CONFERENCE

Nokia will host a press conference today, Tuesday, Sept. 3, at 11 a.m. EEST in
Dipoli, Espoo (Otakaari 24). Registration will start at 10 a.m., and the doors
will open at 10.40 a.m. Due to space constraints, only media who show valid
press credentials at the registration will be admitted. Media are encouraged to
watch a live webcast of the press conference via: http://press.nokia.com/ 

INVESTOR CALLS

Microsoft will hold a conference call for investors, financial analysts and
news media Tuesday, Sept. 3, at 3:45 p.m. EEST/8:45 a.m. EDT.  Interested
parties should call toll-free at (888) 459-9165, or for international calls
dial +1-773-799-3324. You may also access the call online at
http://www.microsoft.com/investor. 

Nokia executives will hold an investor call at 3 p.m. EEST today, Tuesday,
Sept. 3. A webcast of the conference call will be available at
http://investors.nokia.com. Media representatives can view the webcast or
listen in at +1 706 634 5012, conference ID 45390451. 

MEDIA ENQUIRIES

Nokia

Communications

Tel. +358 7180 34900

Email: press.services@nokia.com

www.nokia.com



Microsoft

Rapid Response Team, Waggener Edstrom Worldwide, +1 (503) 443-7070,
rrt@waggeneredstrom.com 



FORWARD-LOOKING STATEMENTS: NOKIA

It should be noted that Nokia and its business are exposed to various risks and
uncertainties and certain statements herein that are not historical facts are
forward-looking statements, including, without limitation, those regarding: A)
the planned sale by Nokia of substantially all of Nokia's Devices & Services
business, including Smart Devices and Mobile Phones (referred to below as "Sale
of the D&S Business") pursuant to a purchase agreement between Nokia and
Microsoft (referred to below as “Agreement”); B) the closing of the Sale of the
D&S Business; C) obtaining the shareholder approval for the Sale of the D&S
Business; D) receiving timely, or at all, necessary regulatory approvals for
the Sale of the D&S Business; E) expectations, plans or benefits related to or
caused by the Sale of the D&S Business; F) expectations, plans or benefits
related to Nokia's strategies, including plans for Nokia with respect to its
continuing business areas that will not be divested in connection with the Sale
of the D&S Business; E) expectations, plans or benefits related to changes in
leadership and operational structure; F) expectations and targets regarding our
operational priorities, financial performance or position, results of
operations and use of proceeds from the Sale of the D&S Business; and G)
statements preceded by "believe,""expect,""anticipate,""foresee," “sees,”"target,""estimate,""designed,""aim", "plans,""intends," “focus,” "will" or
similar expressions. These statements are based on management's best
assumptions and beliefs in light of the information currently available to it.
Because they involve risks and uncertainties, actual results may differ
materially from the results that we currently expect. Factors, including risks
and uncertainties that could cause these differences include, but are not
limited to: 1) the inability to close the Sale of the D&S Business in a timely
manner, or at all, for instance due to the inability or delays in obtaining the
shareholder approval or necessary regulatory approvals for the Sale of the D&S
Business, or the occurrence of any event, change or other circumstance that
could give rise to the termination of the Agreement; 2) the potential adverse
effect on the sales of our mobile devices, business relationships, operating
results and business generally resulting from the announcement of the Sale of
the D&S Business or from the terms that we have agreed for the Sale of the D&S
Business; 3) any negative effect caused by us entering into the Sale of the D&S
Business, as we may forego other competitive alternatives for strategies or
partnerships that would benefit our Devices & Services business and if the Sale
of the D&S Business is not closed, we may have limited options to continue the
Devices & Services business or enter into another transaction on terms
favorable to us, or at all; 4) our ability to effectively and smoothly
implement planned changes to our leadership and operational structure or
maintain an efficient interim governance structure and preserve or hire key
personnel; 5) any negative effect from the implementation of the Sale of the
D&S Business, which will require significant time, attention and resources of
our senior management and others within the company potentially diverting their
attention from other aspects of our business; 6) disruption and dissatisfaction
among employees caused by the plans and implementation of the Sale of the D&S
Business reducing focus and productivity in areas of our business; 7) the
amount of the costs, fees, expenses and charges related to or triggered by the
Sale of the D&S Business; 8) any impairments or charges to carrying values of
assets or liabilities related to or triggered by the Sale of the D&S Business;
9) potential adverse effect on our business, properties or operations caused by
us implementing the Sale of the D&S Business; 10) the initiation or outcome of
any legal proceedings, regulatory proceedings or enforcement matters that may
be instituted against us relating to the Sale of the D&S Business; and, as well
as the risk factors specified on pages 12-47 of Nokia's annual report on Form
20-F for the year ended December 31, 2012 under Item 3D. "Risk Factors." and
risks outlined in our most recent interim report. Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be
incorrect could cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required. 

FORWARD-LOOKING STATEMENTS: Microsoft

This press release contains forward-looking statements, which are any
predictions, projections or other statements about future events based on
current expectations and assumptions that are subject to risks and
uncertainties. The potential risks and uncertainties include, among others,
that the expected financial and other benefits from the Nokia transaction may
not be realized, including because of: our inability to close the transaction,
or Nokia's inability to repay the financing should it take down the financing
and the transaction doesn't close; the response to the acquisition by the
customers, employees, and strategic and business partners of Nokia's Devices &
Services business; the extent to which we achieve anticipated operating
efficiencies and cost savings, and anticipated smart device and mobile phone
market share targets; the overall growth rates for the smart device and mobile
phone markets; ongoing downward pressure on prices for mobile devices;
unanticipated restructuring expenses; any restrictions or limitations imposed
by regulatory authorities; the impact of Microsoft management and
organizational changes resulting from acquisition of Nokia's Devices & Services
business; the ability to retain key Nokia personnel; our effectiveness in
integrating the Nokia Devices & Services business with Microsoft's businesses;
the response of existing Microsoft smart devices original equipment
manufacturers; risks related to the Nokia Devices & Services international
operations; and our ability to realize our broader strategic and operating
objectives. Actual results may differ materially from the forward-looking
statements because of these and other risk and uncertainties of our business,
which are described in our filings with the Securities and Exchange Commission
(“SEC”), including our Forms 10-K and 10-Q. 

For further information regarding risks and uncertainties associated with
Microsoft's business, please refer to the “Management's Discussion and Analysis
of Financial Condition and Results of Operations” and “Risk Factors” sections
of Microsoft's SEC filings, including, but not limited to, its annual report on
Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained
by contacting Microsoft's Investor Relations department at (800) 285-7772 or at
Microsoft's Investor Relations website at http://www.microsoft.com/investor. 

All information in this release is as of September 2, 2013. Microsoft
undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the company's expectations.