Microsoft pays $7.2B to land Nokia's phone business

Microsoft will now become much more of a hardware company after agreeing to pay Nokia $7.2 billion in cash to buy its cellphone business, with Nokia CEO Stephen Elop returning to Microsoft amid speculation he might replace retiring chief Steve Ballmer. The deal includes the Finnish handset-maker's patents and a 32,000-strong workforce. Ballmer offered three reasons for ending their Windows Phone partnership: the companies' separate business needs; the duplicated efforts of building the two brands; and the difficulties of deciding how to invest each partner's capital. Also, executives said uniting the phone and software under a single banner will boost Microsoft's gross margins from less than $10 to more than $40 per unit. Microsoft will continue to license Windows Phone to other handset-makers.

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