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History Isn't on Side of Microsoft-Nokia Tie Up


Author: Scott Thurm
Coverage Type: reporting
Location:
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-7329
United States

In business, struggling firm plus struggling firm rarely equals success. So say students of corporate strategy, who are skeptical that Microsoft can rejuvenate its lagging mobile-phone efforts through its planned acquisition of Nokia’s handset business.

"The evidence suggests that combining two weaklings doesn't create a strong player," says Robert Bruner, dean of the Darden School of Business at the University of Virginia, and a longtime student of mergers. Juan Alcacer, a Harvard Business School associate professor who has studied Nokia, says companies with small market shares typically "are in a bad position for a good reason." Combining two of them, rarely works, he says: "Two bad companies don't make a good company."

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