Tomahawk, WI 11/25/2013 (BasicsMedia) –  One of the most exciting piece of business news to have been announced anywhere in the world, was Microsoft Corporation (NASDAQ:MSFT)’s decision to spend $7.2 billion in acquiring a part of Nokia Corporation tasked with phone manufacture. Across the world, many investors are now asking if this move was good for either Microsoft or Nokia Corporation (NYSE:NOK), and whether it made any financial sense. The two companies already had a working relationship where they worked together in the manufacture of the Lumia 1020, and reputedly, this is where problems emerged.

A close look at the manner in which the two companies worked together during the manufacture of Lumia 1020, reveals that a number of issues emerged as the relationship continued. The two companies failed to see eye to eye on a number of issues. However, finally Microsoft saw it fit to buy Nokia by paying this massive amount. Investors in Microsoft appear to be displeased with this move, and many of them have sold their shares. A number of Wall Street analysts have downgraded MSFT stock as a result of this deal between the two global tech icons.

The reason investors are a bit apprehensive about this deal between Microsoft Corporation (NASDAQ:MSFT) and Nokia Corporation (NYSE:NOK), is that it is not the first of its kind. A few years ago, in 2007 to be precise, Microsoft paid close to $6.3 billion to acquire aQuantive, which was a renowned advertising agency back then. Close to 6 years later, MSFT wrote down the value of this acquisition by as much as $6.2 billion. In essence, this represents a loss to MSFT, and is the reason investors are apprehensive and are not gung-ho about the prospects of the current deal between Microsoft and Nokia Corporation.

The decision by Microsoft Corporation (NASDAQ:MSFT) to buy Nokia’s phone business is one borne of necessity more than anything else. Microsoft is in a fight to survive, after years of being heavily reliant on PC sales for its revenues and profits. Make no mistake about it, but MSFT is still a global leader in the field of technology. It is in the top ten list of the world’s most valuable brands. However, it has struggled to keep pace with its competitors, and many have demanded for its evolution if it intends to survive. The deal with Nokia is one that should help MSFT in its endeavors.

Microsoft Corporation (NASDAQ:MSFT) has diversified into various fields, such as the one of Smartphone devices through its Windows Phone. The company’s Windows Phone OS has not achieved similar amount of traction to Apple’s OS. It cannot afford to cede more ground to its competitors by thinking of making such drastic decisions as quitting the Smartphone business. It has reached a point where it cannot afford luxuries such as abandoning the Windows Phone. The deal with Nokia ensures that it maintains its dignity as a global leader, although this matter is more than dignity.

Lastly, it is worth mentioning that the issue of duplication has bogged the relationship between Nokia and Microsoft. However, once this deal is fully approved and Nokia’s phone business becomes an integral part of Microsoft Corporation (NASDAQ:MSFT), duplication and other teething problems will be no more.

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.