From the course: Accounting Foundations: Asset Impairment
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Why did Microsoft buy Nokia?
From the course: Accounting Foundations: Asset Impairment
Why did Microsoft buy Nokia?
- In 2013, Microsoft's operating income was $27 billion. The next year, in 2014, Microsoft's operating income was $28 billion. - Okay, excellent, that's a lot of operating income and the trend is up. That's great news. - [Man In Pink] Not so fast. In the following year, 2015, Microsoft's operating income dropped by 33% to $18 billion. - Okay, well what happened? - Well, I can explain it in three words. Nokia impairment loss. - Nokia impairment loss. - Yeah, Nokia impairment loss. - As I recall, Microsoft purchased Nokia's mobile phone division in 2014 for about $10 billion. - That's correct, what you might not know is that there were lots of people associated with Microsoft, including founder Bill Gates and future Microsoft CEO Satya Nadella who initially opposed the Nokia acquisition. - [Man In Red] Okay, interesting. When Microsoft recorded the Nokia acquisition, the company recognized $10 billion in goodwill…
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