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Nokia CEO Stephen Elop, left, and Microsoft CEO Steve Ballmer shake hands at a news conference in Moscow in November.

Microsoft quick to lock deal

But Nokia board met 50 times to discuss sale, chart company’s future

– Microsoft’s agreement to buy Nokia’s handset business, codenamed Project Gold Medal, was more of a sprint than a marathon.

Talks between the two companies began in February after both sides agreed a 2-year-old collaboration on smartphone development wasn’t working, according to people familiar with the deal.

By July, Microsoft and Nokia, based near Helsinki, settled on the price and structure of a $7.2 billion deal to buy the handset business and license its patents, the people said.

In contrast, Vodafone Group’s announced sale Monday of its 45 percent stake in U.S. mobile company Verizon Wireless for $130 billion followed years of talks with Verizon Communications Inc.

Nokia’s codename in the talks was “Nurmi,” named after Paavo Johannes Nurmi, the nine-time gold medal runner known as the “the Flying Finn.” Microsoft was dubbed “Edwin Moses,” for the American track-and-field athlete who won two gold medals in the hurdles.

Nokia’s board met more than 50 times to deliberate on a sale, a process described as a soul-searching exercise by the people, who asked not to be identified.

Timed to follow last month’s announcement that Microsoft Chief Executive Officer Steve Ballmer would retire, the Nokia deal is intended to set up the U.S. company for a renewed assault on the smartphone and tablet markets, the people said.

Once the world’s most dominant technology firm, Microsoft under Ballmer has lagged behind Google and Apple in fast-growing mobile devices, amid contraction in the personal-computer market it helped invent.

“Microsoft realized that it wouldn’t be possible to succeed without controlling the entire value chain,” said Francisco Jeronimo, research director for European mobile devices at research firm IDC in London. “Nokia has realized that it needed a stronger ally with the financial muscle to continue driving its Lumia smartphones.”

Discussions began in earnest after a meeting between Ballmer and Risto Siilasmaa, the Finnish company’s chairman, at the Mobile World Congress in Barcelona in February.

The venue was fitting; Nokia CEO Stephen Elop introduced the companies’ partnership at the 2011 edition of the Congress, which has since become a showcase for flashy announcements from more successful device-makers like Samsung Electronics Co.

The executives felt the collaboration hadn’t delivered on its promise, the people said, citing duplication of efforts on marketing and on encouraging developers to write applications for Microsoft’s Windows Phone software.

Ballmer, who had initiated the talks, felt that Microsoft needed to own a branded consumer device, said a person with direct knowledge of the situation.

Microsoft’s heavily marketed Surface tablet computer has so far been a flop, resulting in a $900 million write-down on the value of unsold devices. The companies also run parallel mapping platforms.

Nokia relied for advice on JPMorgan Chase’s Markus Boser, co-head of technology, media and telecommunications in Europe, the Middle East and Africa, Gary Weiss, head of M&A in the Nordic region, and Jennifer Nason, global chairman for TMT investment banking.

Microsoft tapped Goldman Sachs, where George Lee, global co-head of TMT, and Sam Britton, a managing director on the TMT team, led a team of bankers. Both firms also worked on the $2.2 billion July sale of Siemens AG’s stake in Nokia Siemens Networks to Nokia.

With key issues in the Microsoft deal worked out by midsummer, the companies and advisers spent August hammering out details, the people said. Due diligence for Microsoft, which has never had a large-scale hardware business apart from the Xbox gaming console, was complex, they added.

Nokia Siemens, which builds networking gear for telecommunications operators, will account for the core of the new-look Nokia now that it is exiting the handset business, which as recently as 2007 had nearly 40 percent of the global market for mobile phones.

The decision to abandon the devices business was an emotional one for Nokia’s board, whose chairman and vice chairman are Finns, the people said. The phones are a source of national pride and at one point were carried by 90 percent of Finns.

After introducing its first handsets three decades ago, Nokia emerged as Finland’s first major global corporation and symbolized the country’s transformation into a technology-driven economy.

“There is clearly of course some emotion attached to this, me being a Finn and all that,” Nokia Chief Financial Officer Timo Ihamuotila said in a Bloomberg Television interview.

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