$7.2 BILLION ACQUISITION OF NOKIA

Story first appeared on USATODAY.

Microsoft investors won't be bored this week.

They've got a bunch of scenarios to work through in the wake of the software giant's proposed $7.2 billion acquisition of struggling Finnish cellphone maker Nokia.

First off, Nokia CEO Stephen Elop doesn't necessarily have the inside track to replace Microsoft CEO Steve Ballmer, when Ballmer retires within the next 12 months.

In an interview with the Verge, Ballmer hedged when asked about Elop's future role, as is his fiduciary responsibility to do so.

Ballmer told the Verge: "Our board is going through a process open to internal and external candidates. It's a process that they wanted well-known so they could consider everybody internal and external. Stephen Elop happens to be going from external to internal but our board will consider everybody. They will do it in private — that's the right way for the board to conduct its business."

Even so, no one will be surprised if Ballmer pushes his old protege to the top. Elop, a Canadian, was a senior operations executive at Adobe and Juniper Networks before Ballmer hired him in 2008 to take the reins of Microsoft's cash cow Office product line. Elop left Microsoft in 2010 to assume the CEO posting, heading up Nokia.

"This gives Elop an inside track to replace Ballmer as Microsoft's CEO," says Jack Gold, tech industry analyst at J. Gold Associates. "I think that was a big piece of the calculus behind the acquisition."

Under Elop, Nokia has helped boost Windows Phone, which recently surpassed BlackBerry and became the No. 3 most popular smartphone operating system. Still, Windows Phone is a very distant third. It has just a 3.3% share of the global smartphone market, compared to 14% for iOS and 79% for kingpin Android, according to Gartner.

That said, Nokia remains a major handset manufacturer. It has a "highly evolved device design and manufacturing process which will benefit Microsoft greatly," says Al Hilwa, applications development analyst at IDC. "This is simply the fastest path in front of Microsoft to achieve something like Apple's vision on devices."

Trip Chowdhry, research director at Global Equities Research, is in the camp of Microsoft skeptics who believe it is too late for Windows Phone to catch Android or iOS. "In the Internet era, imitation is not a strategy but a recipe for disaster," Chowdhry observes. "Being fast and first will always win."

Then there is the matter of Ballmer's track record in billion dollar acquisitions for shareholders to contemplate.

Ballmer greenlighted the $1.2 billion acquisition of fledgling social networking site Yammer in July 2012, and engineered the $8.5 billion buy out of Internet phone service Skype in October 2011. Neither Yammer nor Skye has added materially to the company.

And then there is Ballmer's infamous $6.2 billion acquisition of online advertising tech firm aQuantive in May 2007. He pulled the trigger on that deal specifically to counter Google's month-earlier purchase of the larger, more-established DoubleClick, for $3.1 billion. Ballmer gambled that aQuantive would help transform Microsoft into an online advertising giant on par with Google.

But that bet fizzled. In July 2012, the company took a $6.2 billion write-down — basically acknowledging the failure of aQuantive. Investors fumed. Some shareholders felt strongly that Ballmer could have chosen, instead, to pay them $6.2 billion in dividends, which might have also boosted Microsoft's share price.

"I was positive on both the Skype and Yammer acquisitions, but so far am not overwhelmed by what they've added to Microsoft's balance sheet, although both offer strategic advantages that the company could still leverage," says Gold.

In fact, more often than not, high-profile acquisitions rarely live up to the announcement day hype . But that has never stopped executives heading up cash-rich companies from laying down the next big bet.

"It is important for companies facing disruption to bring in significant outside talent to force-change their culture," Hilwa argues. "In this case, Microsoft got Nokia for a fraction of its value a few short years ago. And I am sure Elop will throw his hat in the ring for the job search of the century."