The End of an Error

On July 11th, 2017 with the announcement of the end of support for Windows Phone 8.1 the Verge reported that we had reached “the end of an era” when by most accounts it was the end of an error. Microsoft has been and forever likely will prefer to be an imitator rather than an innovator and acquiring what was left of Nokia’s phone business in 2013 is a classic; driven to sell more and more of its proprietary OS, it runs clean over the leading MS smart phone contender and, feeling the bump, decides it ought to buy the road kill rather than admit it created the mangled mess in the first place. The whole thing was over in less than a year. You can almost hear Steve Ballmer, eyes bulging, brow glistening turn to his multitude of minions and command “take this $10b up to the roof, set it on fire, look at the flames, come back and tell me what you saw”. Of course, they saw a happy place cause those are the kinds of hallucinations $10b can buy you.

Back in 2011 in a post entitled Requiem for a Business Model – Part II we suggested that the whole MS – Nokia tie up would be consummated and immolated in no more than 4 years and by 2015, sure enough, it was. Of course it took a little longer for the write offs to get flushed out. Which ought to serve as a cautionary note to all the Boards of Directors that get behind these types of transactions in the first place. As part of your due diligence, you should pro forma your financials writing off the entire cost of the acquisition as of the day it occurs, and share that with your shareholders.

How else can they fully enjoy the ride?