Obsolescence Insurance, a New High-Margin Business for EMS Companies
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Microsoft Corp. has a growing Elop problem and it may be time for the two to say goodbye. The appearance of impropriety surrounding Microsoft’s relationship with Stephen Elop, the former Nokia CEO and now head of mobile business at the software vendor, is bad and neither party needs the headache that will result from any further deepening of their relationship.
Elop engineered the sale of Nokia’s mobile handset division to Microsoft, his former employer, and stands to collect severance of approximately $25 million. Add this hefty payout to the $6 million he received when he left Microsoft three years ago and Elop’s tortuous Microsoft-to-Nokia and back-to-Microsoft journey reeks of boardroom shenanigan. (See: Huge Payday for Chief Executive Who Is Leaving Nokia.)
Something isn’t right here and I am not the only one saying it. Here are comments from some New York Times readers:
- I propose a new verb based on this very transparent story: "To Elop" someone or something is to appear to help them, while really helping others and yourself, and doing it with no sense of shame, disgust, or failure.
- What kind of "gold digger" ethics does this show on the part of Microsoft? What kind of example does it set for Microsoft and Nokia managers and staff? The company is struggling, Nokia, which it has just bought is struggling, and this guy Elop gets a couple dozen millions because he just "flipped" twice his job from and to Microsoft, to and from Nokia? Come on!
- Wait a minute, this guy is collecting nearly $29 Million from this deal; and then going back to work for the acquirer in a high-level position. And that is not "conflict of interest'. What is the definition then - if this is not a classic case of such conflict...?
- What Elop did was to drive down the value of Nokia so Microsoft could buy the handset business at a discount.
- Hey, SEC something to dig into?
In a previous blog I stressed Microsoft should not replace departing CEO Steve Ballmer with Elop who is considered a leading candidate for that job. I said Microsoft should avoid giving its shareholders, Nokia investors and the larger public the impression Elop’s sojourn at the Finnish company was micromanaged from Seattle. Now, I am beginning to connect dots following the release of additional information about Elop’s severance from Nokia. Apparently, Microsoft will pay the larger share of the $25 million payout. (See: Nokia’s Elop Must Not Become Microsoft CEO & Nokia chairman asked Elop if he would give back €18.8m pay-off.)
There are fiduciary responsibilities at stake here and while Microsoft may believe it hasn’t done anything wrong the public impression is quite different. No evidence has been presented by anyone to indicate Microsoft and Elop did anything wrong or misrepresented their intentions from the moment he initially left the software developer. However, the entire relationship stinks so badly now I believe it’s no longer enough for Microsoft to remove Elop from consideration as its CEO. The two should part ways.
That may be a drastic move but there are numerous well-qualified individuals in the corporate world that can perform creditably Elop’s new duties at Microsoft. Elop, too, needs to remove this cloud over his head. He has an impressive resume and should receive strong offers from other potential employers. They both need a clean slate.
Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at bolaji.ojo@epsnewsonline.com.
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