Nokia sold its phones to Microsoft for €5.44B and pivoted to networks, returning to profit

Nokia lost €3.1 billion in 2012 as smartphones eroded its handset franchise, while the Nokia Siemens Networks unit was already profitable. Chairman Risto Siilasmaa and the board decided the phones business could not be fixed on its own.

On September 3, 2013, Nokia agreed to sell substantially all of its Devices & Services business to Microsoft for €5.44 billion — €3.79 billion for the unit plus €1.65 billion for a patent licence and option — with about 32,000 employees transferring to Microsoft, as Mail & Guardian reported.

Nokia's FY2013 20-F shows continuing operations posting an operating profit of €519 million versus a €821 million loss in 2012; the total net loss narrowed to €615 million as the discontinued device business wound down. Siilasmaa called the year a 'watershed moment'.

The sale raised €5.44B (€3.79B for devices plus €1.65B for patents); continuing operations swung from a €821M loss to €519M profit in 2013.

The phone business was burning cash it could not win back.

Networks (NSN) was already the profitable core to build on.

The €5.44 billion price bought cash and time for the transformation.

Selling to Microsoft guaranteed handset scale without Nokia's capital.

Selling the famous business while it still has value can fund the company you need to become instead of slowly bleeding out.

Nokia used the proceeds and its network focus to buy Alcatel-Lucent in 2015, completing the shift from consumer phones to a pure network equipment group.