microsoft, nokia, mobile

Nokia Lumia 925

While Nokia’s troubles have been in the public domain for quite a while now, solutions to those problems have been slow in coming. However, shares in the struggling mobile giant were up over night after reports emerged that Microsoft held talks with Nokia with a view to buying the mobile business.

Microsoft, Nokia - All Talk

By their very nature these kinds of rumors come with few facts, but the reports, which originally appeared in the Wall Street Journal, say that talks have stalled over price and Nokia’s “slumping market position.”

Citing “people close to the deal” the report suggests that Microsoft was unhappy with Nokia”s inability to gain ground in the mobile market despite progress made with the Lumia range.

Needless to say neither company would confirm or deny the reports, with a spokesperson for Nokia cited as saying that the two companies often met because of their “deep partnership.”

The price Nokia wants for the mobile business was not revealed, but even with its problems, Nokia’s stock market value is close to US$ 14 billion and half of the revenues generated last year were from its mobile segment.

However, for the moment, it seems all bets are off and that talks are unlikely to resume in the near future, if at all, even if the partnership between the two companies would make such a deal a very nice fit.

Huawei As Suitor

This is not the only sign this week that Nokia may be considering a sell off of its mobile business. Earlier in the week, London’s Financial Times reported that the head of the Chinese electronics giant Huawei’s consumer business group, Richard Yu, had said that they would be open to buying not just Nokia’s mobile business, but the entire company.

Needless to say, market activity following that announcement was brisk with heavy trading pushing prices up by 11%, however unlikely such a deal is.

Leaving aside financial considerations, Nokia is one of Europe’s blue chip companies with alliances all over the continent including a significant partnership with the German giant Siemens, which competes directly with Huawei.

You can just hear the anti-trust alarm bells ringing here not to mention the fact that no matter what European leaders say in public about China, in private they still don’t trust it and are unlikely to be willing to allow Nokia take this road.

All that said, there is a mind-set in Nokia that is now used to the idea that part of its business is going to be sold off.

Even if it has made considerable strides with the Lumia range, to pull itself back to the place it occupied before Apple’s iPhone/iPad business just doesn’t seem possible.

While it is cutting new phone deals with new partners all the time, it has still had to close production and research sites and slash more than 20,000 jobs. On top of this, market analysts cited by the Wall Street Journal predict that for at least the next 7 quarters it will post losses, or at least profits of less than US$ 260 million. Another company to watch in the coming months.