Is Microsoft Overpaying for Nokia's Smartphone Business?

Microsoft  shook up the tech world this week by announcing a $7.2 billion deal to acquire Nokia's handset business as well as licensing its patents. Of that total, $5 billion will be for the smartphone operations. The software giant is making some aggressive growth assumptions to justify that hefty price tag.

There are plenty of historical examples of long-term forecasts proving to be way off target, and this could just be the latest example. Microsoft may be forced to move into lower price points for success, which would put pressure on the operating margins that it's trying to grow.

In the following video, Erin Kennedy discusses the major deal with Evan Niu, CFA, and Eric Bleeker, CFA.

The tech world has been thrown into chaos as the biggest titans invade one another's turf. At stake is the future of a trillion-dollar revolution: mobile. To find out which of these giants is set to dominate the next decade, we've created a free report called "Who Will Win the War Between the 5 Biggest Tech Stocks?" Inside, you'll find out which companies are set to dominate, and we'll give in-the-know investors an edge. To grab a copy of this report, simply click here -- it's free!

The article Is Microsoft Overpaying for Nokia's Smartphone Business? originally appeared on

Eric Bleeker, CFA, has no position in any stocks mentioned. Erin Kennedy and Evan Niu, CFA, both own shares of Apple. The Motley Fool recommends Apple and Google and owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story