According to US media reports, Microsoft may announce the cancellation of a large portion of Nokia assets on Wednesday. This was shown at the end of April, when Microsoft warned investors that the smartphone division had “high risk of impairmentâ€. The term impairment is used to describe the situation in which the market value of the business is lower than the book value. In this case, the company is required to withdraw non-cash charges to fill the gap.
Microsoft filed a document with the Securities and Exchange Commission (SEC) on April 23, stating: "The decline in future cash flows used to estimate the fair valuation of mobile hardware reporting units, the decline in future sales growth rates, or the increase in the risk-adjusted discount rate may result in Impairment adjustments result in expenses that may have a material impact on profits."
The acquisition of Nokia was one of the last actions of former Microsoft CEO Steve Ballmer, who resigned in February 2014. Analysts believe the move is necessary for Microsoft to compete in the mobile industry, but it cannot improve Microsoft's wealth in the smartphone market. The current CEO, Cetia Nadella, is believed to be opposed to the acquisition. The last time Microsoft cancelled its acquisition of assets occurred in mid-2012, when the company extracted $6.2 billion in fees associated with aQuanTIve acquired five years ago. Microsoft's acquisition of online marketing company aQuanTIve cost $6.3 billion.
Ironically, on Monday, Microsoft withdrew from the online advertising market and signed an agency agreement with AOL to retain only Bing's search ads. AOL will assume sales of display, mobile and video ads from Microsoft in the US and eight other markets, including the UK, Canada, Germany and Japan. About 1,200 people in the Microsoft advertising department will be transferred to AOL. In return, AOL will be the default search engine for your site. The cancellation of Nokia’s assets may be announced as early as Wednesday in documents submitted to the SEC, as Wednesday is the first business day of Microsoft’s new fiscal year (as of June 30 of each year).
It is unclear how much assets Microsoft will write off because the company has some flexibility in this kind of action. The cancellation of Nokia’s assets also met the warning issued by Nadella last week, saying that Microsoft faced “difficult choicesâ€. In an email to all the staff, he said: "We need to innovate in new areas, implement our plans, make difficult choices in some unsuccessful areas, and solve difficult problems in a way that drives customer value."
Few analysts believe that Microsoft will really shut down the smartphone division or quit the mobile phone manufacturing business, mainly because it invested a lot of resources to develop Windows 10 for a wide range of devices, and encouraged developers to develop "generic" applications and transfer Android and iOS applications. Windows 10 Mobile.
Related recommended reading:
Secret Nokia Factory: How to make a Nokia phone?
The most innovative 10 classic mobile phones in Nokia history
Interpretation of Nokia's three major technological breakthroughs: wireless charging, just a new bottle of old wine?
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