This week, Nokia announced that it would lay off 10,000 workers and reduced its profit forecast, causing the Finnish cellphone maker's share price to sink 18 percent. Nokia continues to get crushed by Apple and Samsung in the smartphone market, having failed to make an impact with its Lumia phone, which runs on Microsoft's Windows Phone operating system. Analysts don't hold out much hope for Nokia, with some saying it has only six months to supercharge its smartphone sales — or die. That poses a big problem for software giant Microsoft, which badly wants to be a smartphone player, but relies on Nokia to make the actual phones. Should Microsoft just acquire Nokia?
Microsoft might not have a choice: Microsoft "could be forced to rescue" Nokia if the phone maker can't get its act together, says Juliette Garside at Britain's The Guardian. Nokia, whose prospects are entwined with Microsoft's, is the "only company attempting to sell significant numbers" of Windows Phones, so allowing it to go under would seriously damage Microsoft's attempts to carve out a space in the booming market for smartphones and tablets.
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No. The two companies would never gel: It's rare for a merger between a software company and a hardware company to work out, analyst Rob Enderle tells ComputerWorld. The respective business cultures are vastly different. Plus, it would be hard for Microsoft, based in Redmond, Wash., to run a distant Finnish company without running it into the ground. And it's in Microsoft's interest to work with several hardware vendors to develop Windows Phones. It shouldn't be seen as exclusively partnered with Nokia.
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But Microsoft should stick with Nokia: A merger would saddle Microsoft with an ailing, money-bleeding company, says Benjamin Pimentel at Marketwatch. But Microsoft needs Nokia to stay afloat if it wants to be a serious player in the industry. The best course is to double down on its investment in the Lumia, and hope that it can gradually claw out more market share for the phone.
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