Nokia concept shares surge on Microsoft acquisition
By Ted Chen, The China PostTAIPEI, Taiwan -- Shares of companies listed among Nokia's suppliers mounted a spirited rally in the market yesterday, following reports of Microsoft's bid to acquire the Finnish multinational's handset division.
September 4, 2013, 2:20 am TWN
Microsoft intends to purchase Nokia's handset division for US$4.9 billion, or NT$148.3 billion, including US$2.18 billion, or NT$64.787 billion, for the company's portfolio of patented intellectual properties.
Following yesterday's opening bell, shares of CompallComm (華寶) and SILITECH (閎暉), two major Nokia suppliers, rapidly surged to intraday highs, the maximum daily movement allowed by the Taiwan Stock Exchange. CompallComm shares gained NT$2.65, and closed at NT$40.85, while shares of SILITECH (閎暉) rose by NT$2.85, and closed at NT$43.95. In addition, shares of Arima Communications (華冠), Largan (大立光), Foxlink (正崴) and Ichia (毅嘉) also saw gains exceeding 1 percent at the end of yesterday's session.
Nokia, once the world's leading handset maker, has faltered amid the proliferation of smartphones and other mobile devices. In the middle of the last decade, the Finnish company had around a 30-percent slice of the worldwide mobile phone market. However, as the adoption rate for smartphones rose, Nokia was surpassed by rival competitors, including Apple, Samsung, HTC, Huawei, and ZTE.
Industry analysts attribute Nokia's decline to the company's slow pace in matching market demand for smartphones.
Currently, Nokia is the sole producer of smartphones installed with Microsoft's Windows Phone 8 (WP8) mobile operating system, while competitors such as HTC and Samsung offer handset variants installed with both WP8 and Google's Android.
According to reports, the company had previously declined acquisition propositions by a number of Chinese handset makers, including ZTE.
Institutional investors indicated optimism and concern for the future prospects of Nokia's Taiwan-based suppliers. On the one hand, suppliers are expected to benefit from a more robust product development and launching process, said institutional investors, who however remain concerned over the possibility that Microsoft may elect to render adjustments to supply sourcing for upcoming products. The ramifications of the acquisition on the performance of Nokia's Taiwan-based suppliers remain to be seen, said institutional investors.