The multinational computer company, Microsoft is one of the most profitable industries in history. As with most successful industries, they try to continue their success with a series of acquisitions. These are Microsoft’s most expensive acquisitions.
Nokia is one of the oldest cell phone companies in history, which began as a Finnish rubber manufacturer in 1865. The electronics aspect of the company was not created until 1960, and its first device was an electronic analyzer for nuclear power plants. They later would become one of the first innovators of the mobile phone. Prior to their acquisition of Microsoft, Nokia had an alliance with the computer manufacturer. Nokia shifted their efforts to develop the Windows Phone from MeeGo and Symbian. Microsoft provided Nokia with developer tools and Nokia would create applications and software for the Windows Phone and Nokia maps.
However, after its announcement of the alliance, Nokia’s share prices fell 14 percent and Nokia smartphone sales collapsed. After 2012, Nokia began laying off employees in the thousands: approximately 40,000 by the end of 2013. Their financial troubles became so severe that the company had to sell their headquarters. They had a slight renaissance of sales at the beginning of 2013 by focusing on their own products instead of the Windows Phone. This may have prompted the acquisition by Microsoft in September of 2013 for $7.2 billion. Nokia’s CEOs and lead developers took positions at Microsoft. They are now developing the Windows Phone and products under their original brand name, Nokia.
Skype Technologies (the popular communication and video conferencing app) became one of the most expensive acquisitions made by Microsoft. Skype was originally founded in 2003 by Niklas Zennstrom from Sweden and Jane Friis from Denmark and was headquartered in Luxembourg with offices in Washington, Redmond, Prague, Stockholm, Tartu, and Tallinn. Microsoft was not the first company to purchase Skype; in October 2005, eBay purchased the company for $2.6 billion. At which point, development began for the video telephony, and the two original CEOs were replaced.
On May 10, 2011, Microsoft declared that they would acquire Skype for $8.5 billion. This is Microsoft’s most expensive acquisition to date. The money spent during the sale is 32 times Skype’s operating profits, which marked a 300 percent increase in value for the company. Skype became a subdivision under Microsoft with former CEO Tony Bates reporting to Microsoft CEO Steve Ballmer. In October 2012, the Skype division took over Microsoft’s Unified Communications and VoIP product Microsoft Lync. The company is now located in Palo Alto, California.
aQuantitive, Inc. was not only one of Microsoft’s most expensive acquisitions, but one of the most valuable to the computer manufacturer. aQuantitive was the parent company of a collection of three digital technology and marketing companies: Atlas Solutions, DRIVE Performance Solutions, and Avenue A/Razorfish. The company was founded in 1997 in Seattle, Washington. In 2005, it was ranked by Advertising Age magazine as 14th in terms of revenue among advertising agencies worldwide. Microsoft purchased the company for $6.2 billion. aQuantitive became part of Microsoft’s Advertiser and Publisher Solutions (APS) Group. Since then, the company has been one of the leading sources of revenue for Microsoft.
By Andres Loubriel