Show Hide image

Nokia’s partnership with Microsoft will not result in a takeover of the phone company

Chief Executive Stephen Elop says there will be no takeover by Microsoft, but Nokia will continue to

Nokia's Chief Executive Stephen Elop denies rumours of a Microsoft buyout, claiming there has never been talk of the matter between the two companies.

"There's absolutely no discussion. The rumours are baseless. It is as clear as that," said Elop at the D9 conference near Los Angeles.

The company admitted that phone sales will be much less than the previous projection for 2011, which fell between €6.1bn to €6.6bn. Nokia says it is no longer "appropriate to provide annual targets" for the year.

Nokia reported that operating margins for the quarter will be "substantially below its previously expected range of 6 per cent to 9 per cent (...) primarily due to lower than previously expected net sales".

In April the company terminated 700 of its 2,400 jobs in the UK, the initial stage of a bigger plan to do away with 4,000 jobs within the next two years. Nokia hopes this will reduce costs by £886m by the end of 2012.

On Tuesday Nokia warned stockholders of the possibility of a profitless quarter in its mobile division. Following this report, shares decreased by 15 per cent. Speculation of this takeover contributed to an increase in the Nokia stock on Wednesday.

In February Nokia entered into a "broad strategic partnership" in an effort regain its status as a major player in the mobile phone industry. Microsoft agreed to pay Nokia billions of dollars to use the Windows Phone software in the smartphones it plans to release later this year.

This new technology will replace Nokia's Symbian operating system, which the company hopes will allow them to better compete in today's mobile market. Elop said Symbian technology is outdated, making it too difficult to operate and service.

"Symbian was at a deficit in some markets. Our assessment of the speed with which we could catch up [was that it] would not be enough," said Elop.

Nokia, the world's biggest mobile phone maker, has suffered in the market over the past three years as Google's Android OS emerged and Apple's iPhone sealed its position as the biggest mobile company in terms of revenue.

Nokia considered using Android rather than Windows Phone, but chose the latter with the hope that it would help its products stand out in the market in the long run.

Experts are saying that the Windows Phone will emerge as one of the industry's top smartphones within the next few years, rivalling Google's Android, Apple's iOS and RIM's BlackBerry.

"My principal focus and the focus of the team is to take care of the short term but make sure that the execution is flawless," said Elop.

Elop said the deal with Microsoft will benefit both companies.