New report says Steve Ballmer was in favor of idea, but Bill Gates and other board members opposed.

ballmer elop Takeover of Nokia divided Microsoft’s board

Microsoft’s acquisition of Nokia’s handset business was so divisive with Microsoft’s board that Steve Ballmer reportedly yelled that if he couldn’t get the board to approve the deal he could no longer be CEO, according to a new report from Bloomberg.

According to sources that spoke to Bloomberg, the debate over the acquisition of the company was twofold: Was the price right? Should Microsoft also be a mobile hardware company?

While Bloomberg’s sources didn’t divulge how the entire board felt about the deal – only hinting that the majority were opposed – but heavyweights like then-Cloud EVP Satya Nadella, Tony Bates and Bill Gates were definitely opposed. Nadella later agreed to do a straw poll of other non-board member executives to gauge interest, and apparently subsequently changed his mind on the matter. Reportedly a point of contention amongst board members was the inclusion of Nokia’s HERE maps division in the first draft of the deal – Ballmer was all for it while others saw it as unnecessary since Microsoft already had a map unit.

But Gates’ opposition to the plan hurt Ballmer. Bloomberg didn’t reveal if Gates eventually backed the plan, but his initial steadfast opposition to a deal that Ballmer considered his baby created such a divide between the two that Brad Smith, Microsoft’s General Counsel, had to persuade them to take the stage together at the company’s annual shareholders meeting.

Part of Ballmer’s frustration with the board’s scepticism of the deal might stem from the board’s history of rubber-stamp compliance with his ambitions. As Bloomberg reports:

For more than a decade, directors gave Ballmer what he wanted. Then two outsiders who joined the board in the first half of 2012 — Thompson, a former Symantec Corp. CEO, and Steve Luczo, CEO of Seagate Technology Plc — teamed with others to challenge him. They pressured him to move faster to compete with Apple, Google and others dominating mobile technology, fearful Microsoft would be locked out and left with the shrinking personal-computer market.”

Since the deal went through, Microsoft’s leadership has been publicly united in its support. In a recent email Nadella said the deal was “the right move for Microsoft.”

But Microsoft’s board may be gearing up for another fight related to the software company vs. hardware company internal debate that arose from the Nokia deal. Activist shareholder ValueAct has a seat on the board as of this month, and is known to favor Microsoft focusing on its enterprise and software business rather than Surface, Xbox and Windows Phone. It will be interesting to see if the same fault lines arise when ValueAct pushes ditching those hardware lines at its first board meeting.

Source: Bloomberg