Strategic Performance Analysis Of Microsoft's Acquisition Of Nokia Corporation's Devices And Services Business

On September 3,2013,Microsoft Corporation and Nokia Corporation 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 smart phones,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.On April 25,2014,Microsoft corporation completed the acquisition of Nokia device and services sector and gain access to a number of Nokia's patents,achieving the unified control of software and hardware.In this paper,making Microsoft's acquisition of Nokia as the research object and the balanced scorecard as a build performance evaluation system,first I select several evaluation indicators based on financial,customer,internal processes,learning andgrowth of four aspects to create an Acquisition strategy performance rating framework and analyze the indicators before and after the acquisition of Nokia by horizontal comparison and longitudinal comparison.In the financial dimension,this paper chooses eleven ratios from the four separate aspects of profitability,management capability,solvency and development ability based on the traditional financial analysis method.In internal process dimension,the choice of interest expense growth rate,interest expense accounted for operating income,SG&A growth rate,SG&A accounted for operating income ratio reflects the efficiency of internal operations.In customer dimensions,the selection of market share,tax growth rate,tax growth accounted for operating income ratio evaluate the performance from the perspective of market and society.In the learning and growth dimension,the growth rate of R&D expenses and the ratio of R&D expenses to operating income reflect the impact of M&A based on the long-term value of the enterprise.And then I carries on the comprehensive evaluation analysis by using the factor analysis method to measure each index weight.Factor analysis gives access to obtain factors which have economic explanations and also provide the factor comprehensive score.Finally,I compare the factor comprehensive score and the rank before and after the merger by the event research method and evaluate the strategic performance of the M&A,trying to provide reference and enlightenment for China's cross-border mergers and acquisitions.The consequence shows that strategic performance analysis is superior to pure financial performance analysis,and it can fully evaluate the implementation effect of M&A strategy.In this case,the overall performance of M&A fails to meet its expectations and does not achieve its strategic objectives.