One of Microsoft's 'tough choices' could be a write-down of Nokia

Jonny Caldwell

One of Microsoft's 'tough choices' could be a write-down of Nokia

It’s rumored that Microsoft may lay off some of its employees at its Nokia acquisition as well as to write-down on its estimated value. 

Just this Monday, Microsoft struck a deal with AOL that involved internet advertising. Under the agreement, AOL will handle management, sale display, and video advertising on MSN, Skype, Xbox, and other Microsoft products around the world. In addition, AOL’s search and advertisement will be powered by Microsoft’s Bing. In return, the two companies will share profits from the advertising of each other’s products. 

It’s reported that Microsoft will move about 1,200 of their employees over to AOL. John DiFucci, analyst at Jefferies, says Microsoft’s decision to exit the display ad business shows “management’s continued discipline around allocation of resources and costs,” on a research report. He also says that there’s a good chance Microsoft could write-down about $5.2 billion in with its Nokia acquisition. He explains, 

“An aggressive write-down and restructuring would mitigate future losses, but we note that the business would still likely burn cash. We see the Phone Hardware business as poorly positioned versus the established Apple and Android ecosystems and believe Microsoft will have to either make significant investments to drive scale or accept lower market share and market relevance.” 

It would still pretty surprising to see such large of a write-down on the value of Nokia. After all, a huge majority of Windows phones are manufactured by Nokia.