Report: Microsoft Mulling Acquisition Of Nokia Smartphone Division

Microsoft and Nokia aren't commenting on circulating reports that Microsoft is negotiating to acquire the Finnish company's smartphone division.

The latest reports were sparked by a Twitter post by Eldar Murtazin, editor-in-chief of Mobile-Review.com, in which Murtazin said that Microsoft CEO Steve Balmer and Andy Lees, president of the Microsoft Windows Phone Division, would meet with Nokia CEO Stephen Elop during next week's Consumer Electronics Show in Las Vegas to conclude the deal.

Nokia, according to the report, would transfer its smartphone division to Microsoft sometime in the second half of this year where it would operate under a new name. The acquisition would include manufacturing facilities and a portfolio of patents.

Nokia would be left with its feature phone and networking equipment businesses. Reports also have Elop, who led Microsoft's Business Division before taking the Nokia post in September 2010, stepping down from his current job once the Smartphone operations are transferred to Microsoft.

Spokespersons from Nokia and Microsoft both said Thursday that their companies would not comment on the acquisition reports.

Microsoft and Nokia forged an alliance last year under which the two companies are developing a mobile phone ecosystem around Microsoft's Windows Phone mobile operating system. The partnership was formed to help both companies better compete against Apple's iPhone and smartphones based on Google's Android mobile OS.

Under the alliance Microsoft is making payments to Nokia "measured in the billions of dollars," the two companies said in April.

The first Windows Phone-based Nokia smartphones, the Lumia 710 and 800, debuted in October.

Microsoft, however, has struggled to gain market traction with Windows Phone, which has been on the market for more than a year. Microsoft's share of the U.S. smartphone platform market dropped to 5.2 percent in November from 5.7 percent three months earlier, according to Internet statistics firm Comscore. Google Android's market share, meanwhile, stood at 46.9 percent while Apple's iPhone held a 28.7 percent market share.

Microsoft doesn't have much of a track record when it comes to marketing mobile devices. The company discontinued its Kin products in June, 2010, just two months after launching them, because of dismal sales.

The company, nevertheless, may be feeling the competitive pressure to take another stab at the smartphone market. Google is in the process of acquiring Motorola Mobility for $12.5 billion, a move that would expand Google's presence in the mobile market and add to Android's momentum.