Nokia shares hit by Microsoft announcement

Nokia’s share price took a hit in early trading after it confirmed a strategic smartphone platform alliance with Microsoft and sweeping changes to its structure and management line up.
The price fell around 66 € cents to €7.47 on the back of the announcements, which will see the Finnish vendor design a range of exclusive Windows Phone 7 smartphones that will line up alongside existing Symbian and forthcoming MeeGo devices.
A new internal structure is designed to simplify the distinction between its smartphones and low to mid-tier portfolio, as the firm looks to become slicker in its execution in a bid to stave off the growing threat of Apple’s iPhone and a host of Android-powered devices.
Recently-appointed chief Stephen Elop said the firm is embarking on a new path “aimed at regaining our smartphone leadership,” and “reinforcing our mobile device platform.”
He noted the firm is “at a critical juncture, where significant change is necessary and inevitable.”
The detail
Nokia’s proposed alliance with Microsoft will make WP7 the vendor’s primary smartphone platform. The vendor will have a hand in shaping the future development of Microsoft’s mobile software through its hardware expertise, and the two firms will look to combine services to promote innovative new applications and device features.
The tie-up doesn’t spell the end for Symbian or MeeGo, however. The long-established Symbian platform will be offered as a franchise product, while MeeGo becomes and open source OS, focused on next-generation devices.
A new divisional structure will launch on April 1 that splits the handset business into two clear segments – smart devices and mobile phones.
The smart devices business will be headed up by Jo Harlow and will take over the firm’s current Symbian, MeeGo and strategic business operations.
Mary McDowell will take the helm at the mobile phones segment, which will focus on producing affordable, web-capable, devices for the masses. The division aims to “connect the next billion people,” press information states.
Despite the revelations of sweeping changes, the vendor is cautious on the short-term impact of the changes, noting that 2011 and ‘12 will be “transition years,” focused on building a Windows ecosystem.
In the longer term, the vendor revealed plans to grow devices and services sales “faster than the market,” and boost operating margins to 10% or higher.