Nokia is the biggest cell phone producer around the world. Their smartphones which run the in-house Symbian OS made the top-selling in 2010, but Google's Android software has posted increasingly sharp gains recently. Nokia which was regarded outdated, has lost market share in the rapidly growing smart phone sector to complete with Google's Android and Apple's operating system. In order to catch up in the fiercely competitive smartphone market, Nokia CEO Stephen Elop announced a plan that alliance with Microsoft and running the Windows Phone OS instead of the in-house Symbian OS on this Friday. It clearly demonstrated that there are three main competitors in the global cell phone market between Microsoft-Nokia, Google's Android and Apple iPhone OS.
Mr. Elop who came Nokia last year from Microsoft made the deal aimed to revamp the company increasing their market share of smart phone. However, it made Nokia shares decreased sharply from $11.27 on 7th Feb. to $9.59 on 11th Feb. And Microsoft shares took off $27.70 on 7th Feb. to $27.63 in this weekend. Why will cause this declined under this decision made?
Some analysts thought Nokia accepted the software from Microsoft while intends to use their Bing research engine across its cell phone. It is really grand for Microsoft as its challenge Google as the world's largest search engine. Furthermore, this bid is a possible main breakthrough for Microsoft which should be able to get 30 million from smartphones sold by Nokia each quarter.
Nokia cost $4 billion a year more than twice Apple's R&D budget. About four-fifths of Nokia's 18,000 to 19,000 R&D employees are in software. However, according to Elop announced shift toWindows, hundreds of employees walked out in Tampere where about half the 3,000 workers are Symbian developers. Nokia cut a huge its R&D spending through bid with Microsoft, and earning more than billion dallors from Windows.
Nokia saved their spending to create more benefits for company, and gained huge benefits from this deal. However, Nokia had to face the pressure of their debt issue and the drastic competition. Is it a truth winner in this bid events with Microsoft?
Do you think EMH exist in this case? if you think it exists, which form is it gonna be? and why?
ReplyDeleteyou're right. EMH theory is not clearly showed in this case analysis.
ReplyDeleteNokia share price increase whey thet announced that they will alliance with Microsoft. However, their share prices continued go down after that time.
It could be belonged to weak-form efficiency.