Microsoft is down 4.5% this morning on the news that its buying Nokia.
This Nokia deal is a dose of reality for any investor that got optimistic when Steve Ballmer announced he was leaving the company.
Instead of creating a simpler company that focuses on the enterprise like everyone wants, Microsoft seems poised to become an even bigger, more complicated company with more money-losing consumer businesses.
Xbox barely makes any money. Windows Phone is a money loser. Bing is a money loser. Consumer PCs are in decline (though they make lots of money).
Meanwhile, Office and Servers & Tools are growing, profitable businesses.
The Nokia deal isn’t terrible. Microsoft is spending ~$7 billion to acquire its smartphone partner. Odds are that Nokia was going out of business if Microsoft hadn’t stepped in. And that $US7 billion was just going to be sitting around, since Microsoft wasn’t bringing off shore cash back home for tax reasons.
Still, this deal is a reminder that just because Ballmer is leaving, it doesn’t mean anything is necessarily going to change at Microsoft.