Vol. 1, Issue 20, September 30, 2003
Norelco, Nokia Merger Called Off
Wall Street was jittery today on news that Nokia had called off its planned purchase of Norelco Consumer Products from Philips Electronics. The merger, which had been in the works for several months, was considered vital to the continued survival of Norelco's market presence in the United States.
"Competition from brands such as Remington and Braun has cut into Norelco's sales in recent years," said market analyst Herrod Shore. "The proposed merger with Nokia was seen as an innovative potential solution."
The merger allegedly hinged on a proposed design that would have combined a Norelco electric shaver with a Nokia phone. The resulting device would have enabled users to talk on the phone at the same time as they shaved.
"The possibilities were phenomenal," said Shore. "Theoretically, the ability to maintain one's shave throughout the day was attractive to men seeking to avoid five o'clock shadow. And, of course, cell phones are attractive devices in any setting."
Despite early promise, however, the $2 million joint research project failed to develop a workable prototype. As a result, Nokia announced that it was pulling out of the planned merger.
"It just didn't make sense for us to continue moving in this direction," said Nokia Chairman and CEO Jorma Ollila. "We will instead concentrate on our new line of cell phone-enabled neckties and undergarments."
The problem was apparently the vibration and noise of the shaver, which engineers were not able to reduce sufficiently to enable a normal conversation on the phone.
"You couldn't hear a damn thing," said Darren Esterhaus, a Nokia researcher who was part of the design team. "No matter what we did, the shaver drowned out any conversation. You had to shout to be heard."
Concerns had also been raised by consumer safety groups worried that users of a shaver/cell phone would be tempted to shave while talking and driving.
It is unclear what direction Norelco will pursue now that the merger is called off.
"There are rumors that Norelco is in talks with Pepsi," said Herrod. "We really don't want to know where that's going."
