Bloomberg is reporting that Microsoft will end up paying Nokia over $1 billion for the recent Windows Phone 7 deal, through development and promotional costs.
“Nokia will pay Microsoft a fee for each copy of Windows used in its phones, costs that will be offset as Nokia curtails its own budget for software research and development,” says one of the sources even though the full agreement has not been signed yet.
The deal will last for “over 5 years.”
Most analysts have called the deal a winner for Microsoft, who will gain a huge platform boost for a relatively insignificant amount of money. Nokia, on the other hand, has seen their shares fall 25 percent since the announcement, as investors doubt the move will help fix Nokia’s faltering market share.
Additionally, margins at Nokia have fallen to just 5 percent in 2010 from 19 percent in 2001.
Result for: investors
Barnes & Noble has said this week, somewhat surprisingly, that it plans to put itself up for sale after suffering large losses in the battle for leader in the digital books market.
After the news, shares of the company jumped as high as 27 percent, finishing the day up 19 percent.
Founder and largest shareholder Leonard Riggio said he would consider being part of an investment group that could purchase the company.
The news appears to signal that the company is in desperate need of strong decisions that may not be so easy as a public company.
Says Forrester analyst James McQuivey: “They might feel they want to buy the company back now and take it public later and reap the windfall. But there aren’t a lot of investors who will be that certain about the probable outcome of that bet.”
The company has now formed a “special committee of four independent directors to consider all options for increasing shareholder value.”
While the company remains the top brick-and-mortar book store in the world, it has faced increasing pressure from Amazon and Wal-Mart.
Result for: investors
LG Display has increased fears of rapid supply growth of LCD panels by announcing it is considering constructing a new LCD production line to meet demands. Manufacturers of LCD television products have been enjoying a healthy level of demand for LCD flat-screens, bolstered recently by Chinese holidays and sporting events like the Winter Olympics.
However, concerns are taking root in the industry that it may return to a state of oversupply as manufacturers beef up production to capitalize on the demand. Controlling supply is important for players in the industry to maintain profit margins for the technology.
“Although demand is strong, growing capacity will become increasingly burdensome for the industry,” said Jason Kang, an analyst at NH Investment & Securities. “Supply is already growing and the growth will be faster next year.”
LG plans to begin operation of a separate production line in the first half of 2010, while Taiwanese rivals are increasing factory utilization. “We are considering increasing capacity because we have been unable to meet all client demand for some time,” said an LG Display spokesman. “But nothing has been decided yet.”
LG Display CFO James Jeong revealed to investors just last month that the company was meeting under 90 percent of orders received and that the situation was likely to continue for months.
