Microsoft and Huawei eye Nokia buyout, but interest cools for now

Microsoft considered buying Nokia's handset business, according to sources cited by the Wall Street Journal, but it appears talks have fallen through.

The sources said that the two companies held “advanced talks” about an acquisition as recently as this month, revealing that Microsoft is interested in fully controlling the hardware side of its mobile business in addition to its Windows Phone software.

Nokia and Microsoft were tight-lipped about the talks, with Microsoft refusing to comment and Nokia simply saying there is nothing unusual about the two companies meeting. However, It did not outright deny the reports.

The duo share a close relationship, thanks to a deal struck in early 2011 for Nokia to exclusively sell Windows Phone devices. The gamble has so far failed to take off, with rivals Apple and Samsung - the latter using Google's Android platform - continuing to dominate the market.

The talks appear to have collapsed over disagreements on the value of Nokia's mobile division, but Nokia's weak market position was also a likely factor. Microsoft may have used Nokia's under-performance as an argument for a lower price.

Rumours that Huawei is also interested in buying Nokia might have given the Finnish firm additional confidence at the negotiation table. However, Huawei has said it has “no plans” to buy Nokia, despite Richard Yu, head of consumer electronics, stating that the company is “open-minded” about such acquisitions.

It remains to be seen if any company will follow through and take over all or part of Nokia – or if the firm is left to plot a revival on its own.