Samsung Electronics, the world's second largest maker of mobile phones and a major maker of consumer electronics and semiconductors, may attempt to make a bid for Nokia Corp., the world's No. 1 maker of mobile phones, a market rumour suggested. Naturally, neither Samsung nor Nokia comment on the information and analysts remain skeptical about such a combination.
Back in May a rumour transpired that Microsoft Corp. would be interested in acquiring Nokia for roughly $19 billion and that the price is the highest possible bid that that the software giant would pay. Other rumours suggested that Nokia's board of directors would agree to sell the company for $28 billion. The current market capitalization of Nokia is $23.11 billion after a huge decline on May 27, therefore Microsoft's maximum bid is not sufficient. But Samsung can acquire Nokia at the price offered by the BOD of the company that is bleeding.
Nokia is clearly capable of creating world class smartphones, in fact, up until Q1 2011 the company's Symbian was the world's leading smartphone operating system. The company's phones have been outselling all major competitors combined just several years ago. The combination of Nokia and Samsung would not only form the world's largest maker of mobile phones, but would bring together the leading silicon and product engineers on the planet.
"Samsung acquiring Nokia doesn't seem very feasible as the two companies are on quite different trajectory paths. Samsung has seen tremendous growth and is launching new pads trying to target Apple, whereas Nokia is clearly going backwards losing market share very quickly. I don't see a lot of value in Samsung acquiring Nokia," said Pete Cunningham, an analyst with Canalys.
Nokia's market share started to decline a long time ago as the company struggled to deliver competitive phones with touch-screens. Nonetheless, it remained the world's No. 1 smartphone maker even in Q1 2011. The real market share drops started to occur after Stephen Elop became the chief executive officer, said that the company would adopt the world's least popular and competitive smartphone operating system - Microsoft Windows Phone 7 - and that the support and development of Symbian will be essentially halted. After Mr. Elop revealed the plan about a year before any Nokia-branded Windows Phone-based smartphones could enter the market, sales of Symbian-based devices started to stagnate especially because the company could rapidly respond to marketing and quality problems.
With Samsung's expertise in hardware, Android operating system and Nokia's handset designers and software developers, the combined firm would become a formidable force on the consumer electronics market in general.
"It seems like a market rumor and we don't comment on rumors," a spokesman Samsung said. Nokia spokeswoman also said the company does not comment on rumors, reports WSJ.