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Microsoft (MSFT) Cleared for Nokia Acquisition, To Encrypt Services

By: , dated December 5th, 2013

Shares of Microsoft Corporation (MSFT) closed up +0.63 or +1.64 percent to $38.94 per share on Wednesday in active trading after the stock hit a 13 year high of $38.98. The stock reacted to news that the company had received clearance from European regulators for Microsoft’s acquisition of Nokia’s (NOK) devices and services division.

In other news, Microsoft responded to customer concerns over U.S. global government surveillance with a plan to inform customers of legal orders in relation to their data and to fight in court any “gag” order issued by the court preventing the company from sharing information.

Redmond, Washington based Microsoft Corp. is the largest maker of computer software in the world by revenue. The company also manufactures and sells consumer electronics and personal computers, operating systems and game consoles such as the Xbox.

Wednesday’s news of the European Commission’s approval of the acquisition of Nokia’s devices and services division came after the U.S. Federal Trade Commission approved the deal over the weekend. The transaction, worth over $7 billion is now set to be completed after approval from the two regulating agencies.

According to the European Commission, “There are only modest overlaps between the parties’ activities and the links between Microsoft’s mobile operating systems, mobile applications and enterprise mail server software with Nokia’s smart mobile devices are unlikely to lead to competitors being shut out from the market.”

The acquisition, announced in September is expected by both companies to be completed in early 2014. Microsoft and Nokia have closely collaborated on smartphones, with Nokia running Microsoft’s Windows Phone operating system on their handsets.

In addition to the Nokia news, Microsoft issued a statement on its blog post assuring customers it would take action expanding the encryption of its customer’s data. Microsoft will increase its efforts to protect private data and reassure customers that their products do not contain any “back doors” allowing the government access to their information.

The blog post reiterated that, “We want to ensure that important questions about government access are decided by courts rather than dictated by technological might. And we’re focused on applying new safeguards worldwide, recognizing the global nature of these issues and challenges. We believe these new steps strike the right balance, advancing for all of us both the security we need and the privacy we deserve.”

The post continued, “Government snooping potentially now constitutes an ‘advanced persistent threat’ alongside sophisticated malware and cyberattacks.” The encryption improvements are set to be completed by the end of next year.

Google (GOOG) and Yahoo (YHOO) are also set to improve their encryption after reports that the NSA had cracked their encryption and introduced back doors in their coding. The reports, which were published in the New York Times (NYT), the UK Guardian and the Washington Post (WPO), were based on documents released by former NSA contractor, Edward Snowden.

Microsoft stock hit a level not seen since 2000 on Wednesday. With news of its Nokia acquisition and the measures the company is taking to safeguard customer data, the stock could be at a major upside breakout point. Nevertheless, end of the year profit taking may put pressure on the stock price, which could resume its rally in 2014.

Other News About Microsoft
‘Smart bra’ in development at Microsoft
Mood detecting bra being developed by the company.
Here’s Why Microsoft’s New Mobile Strategy Will Help It Overtake Apple In 3 Years
Forbes article on how Microsoft might overcome Apple after its Nokia acquisition.

Other Stocks in the News
Apple’s China Mobile Deal In On Says The WSJ
Apple signs deal with China Mobile to offer iPhones on its network.
GM Pulls Chevy From Europe After Decade as Opel Expands
Chevy to be pulled from European market in favor of Opel and Vauxhall brands.

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Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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