Nokia acquires Trolltech for $154 million

International Herald Tribune - January 28, 2008
Kevin J. O'Brien


BERLIN: Nokia said Monday that it was paying 844 million Norwegian kroner for Trolltech, a Norwegian software company whose products are used to create applications that work on different operating systems. It is the latest acquisition of a European software specialist.

Nokia, the world's largest cellphone maker, said Trolltech's set of software development tools, called Qt, would allow it to create new applications compatible with the operating systems on its mobile phones, which include Symbian, Microsoft Windows Mobile, Nokia's S40 platform and the Linux open-source system.

The purchase, worth the equivalent of $154 million, "will enable us to deliver on our strategy of developing applications across our range of devices," said Kai Oistamo, executive vice president in charge of Nokia's devices division, during a conference call.

European software companies have recently been targeted for acquisition by global cellphone makers and other companies intent on adding specialist technologies to gain a competitive edge, especially in the emerging market of wireless Internet services.

Just this month, Sun Microsystems, the U.S. software maker, announced it was buying MySQL, the Swedish maker of the world's leading open-source database software, for $1 billion, and Microsoft said it was buying Fast Search & Transfer, a Swedish maker of business intelligence software, for $1.2 billion.

In October, SAP of Germany acquired Business Objects, a French company that is the market leader in business intelligence software, for €4.8 billion, or $7.1 billion.

"In all of these cases, you are seeing companies buying strategic pieces of software," said Adam Leach, a principal analyst in London at Ovum, a research firm. "In many of these cases, it is all about enabling wireless data services, which are finally gaining some traction in the market."

Nokia's purchase of Trolltech, founded in 1994, followed its $8.1 billion acquisition in August of Navteq, an American maker of digital map data. With a dominant 40.2 percent of the global cellphone market in the fourth quarter of 2007, according to Strategy Analytics, Nokia has said it is seeking to broaden its sources of revenue to Internet services from mobile data, which is still in its infancy in Europe.

Trolltech, based in Oslo, reported a loss of 48.7 million kroner in 2006, the last year for which full-year figures were available, on sales of 174 million kroner.

Nokia said 66 percent of Trolltech's shareholders had accepted its offer of 16 Norwegian kroner a share for Trolltech, which employs 250 people.

The Norwegian company gives away its software to the public under open-source licenses and sells deluxe versions to larger customers like Adobe, Skype and Google - which used Trolltech's Qt to develop the Google Earth mapping service.

Nokia and Trolltech said they expected the acquisition to be completed in the second quarter of this year.

Eirik Chambe-Eng, Trolltech's co-founder, said during an interview that Nokia would use his company's software tools to save time and money in creating applications for its handheld devices.

Chambe-Eng and his co-founder, Haavard Nord, Trolltech's chief executive and president, created Trolltech after being stymied in their attempts to develop useful software applications that clients could use across multiple computing systems.

Before founding Trolltech, Chambe-Eng worked for three years for a Norwegian company that made cardiac ultrasound scanners. There, he said, he was prevented from creating software applications for the medical devices because the hospitals, physicians and administrative personnel all used different computer systems.

The scanners ran the Unix operating system, Chambe-Eng said, while physicians studied the results using Apple computers and their administrative assistants used personal computers running Microsoft Windows.

"I was faced with the challenge of creating a user interface software that could work across platforms," Chambe-Eng, said during an interview. "The tools available at the time to do so were non-existent. So my partner and I decided to develop a set of tools that allowed developers to do just that."

Separately, Nokia said it was in discussions to sell its automotive business in Germany and the United States to a former Nokia executive, Razvan Olosu, and a Düsseldorf-based private equity firm called Equity Partners. Nokia said the negotiations could be concluded before June.