Nokia described rumors that Microsoft was planning a bid for its core devices business as “completely baseless” and people close to both companies said there had been no talks about such a deal.
Speculation over a possible bid for Nokia has intensified after its shares plunged by nearly 18 per cent on Tuesday when the company warned that sales and profit margins would be “substantially below” previous expectations in the second quarter.
The stock fell a further 10 per cent on Wednesday morning to its lowest level since 1998 but it recovered most of its losses by the close of trading as rumors of a Microsoft bid gained momentum.
The two companies agreed in February to form an alliance that will see Microsoft’s Windows Phone operating system embedded in Nokia phones in an attempt to create a powerful rival to the Apple iPhone and devices using Google’s Android platform.
Nick Jones of Gartner said Nokia’s transition to the Windows Phone operating system was proving more painful than expected as the company’s existing Symbian range of smartphones lose market share at an accelerating pace.
“When you say something is dead, it’s always going to be hard to persuade people to buy it,” he said, referring to Nokia’s efforts to continue selling Symbian phones after announcing that the platform would be gradually phased out.
Nokia is planning to launch its first Windows Phone device by the end of this year but a complete portfolio of products is not expected until deep into 2012, leaving the company heavily exposed to decline in its Symbian handsets for at least another year.