Microsoft and Nokia call off talks - reports
Potential deal involving Nokia's handset business falters over price and market worries, according to WSJ
Microsoft has called off advanced talks to buy Nokia's handset business, according to reports.
The prospect of a deal between the software giant and ailing mobile phone outfit has been talked up ever since the duo formed a strategic alliance in 2011 that saw Nokia adopt the Windows Phone as its principal smartphone strategy.
Although ongoing until as recently as earlier this month, talks between the pair have faltered over price and market worries and are unlikely to be revived, according to a Wall Street Journal article published last night.
It is unclear how much Nokia was asking for the unit but the Finnish firm - which has a market cap of more than €11bn (£9.4bn) - generates nearly half of its sales from handset sales.
Both Nokia and Microsoft have failed to gain a foothold in a rapidly expanding smartphone market dominated by Apple and Samsung and the iOS and Android operating systems. According to IDC, Nokia's smartphone market share stands at just 2.8 per cent, while Microsoft commands a meagre 3.3 per cent share of the smartphone operating system market.
Nokia's market worth fell from €303bn at the height of the tech bubble in 2000 to €30bn when current chief executive Stephen Elop took the reins in 2010. Its value has since fallen again, to about €10bn in spring, and the Wall Street Journal argued the discussions with Microsoft - even if they come to nothing - signal that the company is ready to sell off its prime assets.
Microsoft has recently shown it is willing to enter the hardware game, having launched the Surface last autumn amid fears it was getting left behind in the tablet space.
Richard Holway, founder of analyst TechMarketView, said any deal would be a sensible move for both parties.
"Nokia nailed its colours to the Microsoft mast and Microsoft really does need a smartphone of its own," he said. "My suspicion is that we will return to this story again as the sense of the deal surely must mean the parties return to the table."