Nokia Stock Rises on Prospect of Huawei Buyout
Following some remarks from Huawei about the prospect of purchasing Nokia, the company’s stock price is on the rise.
During a back and forth with Chinese networking and device manufacturer Huawei, the company’s head of consumer products Richard Yu out right announced that it was open to the idea of purchasing Nokia, saying:
“We are considering these sorts of acquisitions; maybe the combination has some synergies but depends on the willingness of Nokia. We are open-minded”, as reported by Barron’s.
The remarks comes nearly three years after the Nokia decided to attempt to stabilize its fortunes in the smartphone marketing by casting its in-house Meego solution aside in favor of using Microsoft’s Windows Phone. As part of that deal, the company received what the two companies called “platform payments” to assist in Nokia’s transition. As of January 2013 these platform payments totaled at least $1 billion, according to Nokia’s financial reports.
Since the statement first surfaced on the Financial Times, Nokia’s stock price is up a full 11% from its closing price on Monday.
From January on, Nokia will actually pay Microsoft more than it receives as Windows Phone requires the purchase of a license for each device manufactured, though it’s not yet known how much Microsoft charges HTC, Nokia and Samsung per license.
While a buyout would likely put an end to the question of will Nokia survive it may not do much to help either Nokia or Huawei’s smartphone prospects long term. Huawei has been making increasingly bold attempts at building a stable line of Android flagships though its devices typically haven’t entered consumer consciousness, especially in the North American markets where Nokia also suffers from a lack of brand enthusiasm.
For its part, Nokia hasn’t publicly responded to Yu’s statements nor has it ever publicly announced any intentions to sell to another company as a way to survive. Recent statistics from AdDuplex had shown that Nokia absolutely dominates the Windows Phone handset market completely, with around 78% of the operating systems market usage going to the company.