Steve Ballmer Nokia

Following up on the Huawei news from yesterday, the Wall Street Journal is now reporting that Microsoft and Nokia were in advanced discussions about a Redmond purchase of the Finnish phone maker, but the talks have failed to materialize an agreement.

Citing “people familiar with the matter” the online paper notes that discussions eventually broke down due to “the price and Nokia's own strategic predicament”.

Deliberations were evidently held in London as recently as this month, but due to the talks faltering, they likely won’t be revived anytime soon. The WSJ also adds that both companies were close to an oral agreement with Microsoft purchasing the device division of Nokia, using some of Redmond’s reported $66 billion held in off-shore businesses. That method would have let Microsoft avoid a hefty tax penalty for purchasing the massive phone maker.

The Huawei snafu becomes clearer

Huawei CEO

With this news coming forward from a reputable paper, Huawei’s statement yesterday (later rescinded) makes more sense. It now seems obvious that Huawei was aware of the Microsoft-Nokia dialogue and were either goading Microsoft into paying more (by acting as an interested partner) or they were “publicly negotiating” with Nokia by showing interest in a purchase themselves, knowing that Microsoft had walked away.

This raises some very interesting questions, including whether or not Nokia is now looking for other suitors for a buyout, including Asian companies like Lenovo or Huawei or if Microsoft was just a one-off option that failed to materialize.

What’s more, now that Huawei has smelled blood in the water, how aggressive will they get in trying to buyout Nokia?

Lots of questions with few answers loom as the future of Nokia has just become a little less clear tonight. Like much in our audience, we would have preferred a Microsoft-Nokia deal, but this was not the first time these companies have been in talks (see July, 2012) and it may not be the last.

Source: WSJ (paywall)