Tomahawk, WI 9/10/2013 (BasicsMedia) – While Microsoft Corporation (NASDAQ:MSFT) is determined to double its smart phone bet through the recent agreement to buy the handset division of Nokia Corporation (NYSE:NOK), it appears that investors and analysts are not happy with this decision of the company to invest further in hardware business. Investors are quite skeptical of the benefits Microsoft would accrue from this purchase deal.

Failure in hardware business

Hardware business remained heart of Microsoft for long, but quite unfortunately the company faced only failures in all its attempts to enter into this business. Surface Tablet of MSFT is the most recent problem to be quoted in this segment, however, one would not forget the executives shakeup caused by the failures of Zune and Kin hardware designs of the company. Analysts at JPMorgan Chase & Co. published research report in which the stock of MSFT was rated “neutral” in light of the recent agreement to purchase the handset division of the Finnish mobile maker. Further the analysts quoted that the success of this deal is quite uncertain owing primarily to the unfortunate history and instability of hardware business of Microsoft. It is worth noting that the only area where Microsoft’s hardware business proved successful was in the Xbox division, which is primarily due to the gaming industry in which the segment operates.

Competition with Apple Inc.

It appears that Microsoft is recently trying to compete with the businesses of Apple Inc., leading player in smartphone markets. Recent purchase deal of Nokia’s handset division stands to add further proof to this claim and the company is actually trying to win customer loyalty and profit margins that Apple has enjoyed for many years. However, it is quite uncertain whether the customers would be able to brand Microsoft with a smart phone, which was for long associated with the operating system and its enterprise software. Clearly customers would not look out for a Microsoft Lumia in the market.

Nokia to draw on financing

On the other hand, Nokia announced recently that the company would start to draw on the $2 billion worth of convertible bonds that would form part of this purchase deal with Microsoft, at a time when the deal itself is not finalized. Nokia would further utilize the net proceeds from this bond offering to prepay the financing that was raised for the recent acquisition of Nokia Siemens Network joint venture.

Jim Cramer calls for a breakup

The leading analyst of CNBC, Jim Cramer in an earlier report stated that Microsoft is too big and unwieldy and should thereby be split into three companies. The analyst expects that the company should be split into three major businesses which would include Windows business, entertainment division and the other category. It would thus prove essential for Microsoft to revamp its operations and take up strategic decisions so as to keep its business surviving in the markets.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.