Microsoft Sells Feature Phone Biz as Nokia Returns to Mobile

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Microsoft today announced that it will sell its feature phone business to a subsidiary of Foxconn and a newly formed Finnish firm for $350 million. That Finnish firm will in turn create Android-based phones and tablets...for Nokia.

As part of the deal, expected to close in the second half of the year, Redmond will transfer brands, software and services, care network, customer contracts, and critical supply agreements related to the feature phone business to FIH Mobile and HMD Global Oy. FIH Mobile will also acquire Microsoft's Hanoi, Vietnam, manufacturing facility.

Microsoft, however, says it intends to continue developing Windows 10 Mobile and support to Lumia phones and devices from partners like Acer, Alcatel, HP, Trinity, and Vaio.

In a twist, meanwhile, Nokia—which sold its handset business to Microsoft in 2014—announced today that it has inked a deal with HMD to "create Nokia-branded mobile phones and tablets for the next ten years." HMD has "conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights."

FIH, meanwhile, will "support the building of a global business for Nokia-branded mobile phones and tablets," the company said, which will be Android-based.

"Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce [devices] that can leverage and grow the value of the Nokia brand in global markets," Nokia President Ramzi Haidamus said in a statement.

The move is not a complete surprise; the company said last year that "The right path back to mobile phones for Nokia is through a brand-licensing model [via a] partner that can be responsible for all of the manufacturing, sales, marketing, and consumer support for a product."

Headquartered in Helsinki, HMD was founded with the specific intent of creating a new generation of Nokia products, and will be run by current Microsoft mobile execs Arto Nummela (CEO-designate) and Florian Seiche (president-designate).

The deal will affect about 4,500 Microsoft employees, who Redmond said "will transfer to, or have the opportunity to join" FIH or HMD.

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