Will Microsoft save Nokia?

paul
Six weeks ago Nokia's then chairman, Jorma Ollila, said he was confident that the company would show signs of a turnaround this year despite weak first-quarter results, and dismissed any idea that a merger would provide a solution to Nokia's ongoing problems.

Looking at where Nokia now finds itself, Ollila could be accused of being potentially wrong on both counts.

The latest admission from the company that it has no clear visibility on operating margins for its next quarter is worrying--both for its employees and the fact that a company of this size and maturity cannot see what it fortunes might be in the next few months.

News that it had "released" a number of its most senior executives following this announcement provides Nokia with someone to blame for this abysmal state of affairs, but seems little more than a tired knee-jerk reaction given the seriousness of the situation.

Reaction from industry analysts has been muted, perhaps because they are dulled to yet more bad news from Nokia. But there is a limit as to how long this previously world leading company can continue to stagger from one crisis to another. Its once prestigious credentials are damaged to the point where its very survival is in question.

This raises the issue of Nokia becoming an acquisition target, despite what the former chairman might believe.

While the recent idea of Samsung casting an eye over the company has been dismissed (what would such a successful company want with Nokia?), Facebook is the latest name to appear as a possible buyer. It certainly has plenty of cash at present, and might just want to mimic Google with its own handset offering.

But Nokia's heavyweight cost structure makes it a somewhat ugly acquisition target given the volatile economic times we are experiencing, making big and bold gambles unpopular with even the most optimistic entrepreneur.

Nokia's dependence on Microsoft is now almost total, and its future will be determined by how this giant U.S. company regards its partnership with Nokia.

Equally, Microsoft's mobile phone ambitions are heavily linked to the success of Nokia's Lumia portfolio. To this extent, if Nokia fails then Microsoft's hopes of combating Apple and Google will become impossibly difficult.

What would you do in Microsoft's position? --Paul

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