Talks are in motion for a buy-out in a deal that would bring together the Finnish telecoms giant Nokia, together with the much smaller but more nimble Alcatel-Lucent.
Nokia had its peak in the early 2000’s, but with smartphone manufactures like Samsung and Apple taking to the front of the pack in that wildly expanding market, Nokia have been losing market share ever since.
In 2007, Nokia held 62.5% of the smart phone market, but this has been eroded ever since. The market share dropped to 40% by Q4 in 2008, to 32% by Q4 2010, to 6.6% by Q4 2012. Although Nokia dropped off the map in the smart phone industry, this new acquisition could see them making something of a comeback into the telecoms industry.
With 6,000 employees in France, the French government is taking great caution over how the deal between Nokia and Alcatel-Lucent could end up. French President Francois Hollande is taking personal interest in the situation to ensure that French jobs are protected and that no down-sizing can occur in the French side of the operation.
The French government has the power to block foreign takeover bids on French businesses, after a 2005 law that allows them a much greater amount of protective and defensive economical power.
One problem that has been highlighted, is that at the moment the two companies have competing R&D departments, and with Nokia in a position to overpower Alcatel-Lucent, there are concerns that much of the French companies R&D department could be cut to make way for the Nokia teams’ work.
Analysts do not expect any counter-bids from competition Ericsson or Chinese firm Huawei, as both companies would struggle to successfully negotiate with the French economical ministers who oversee foreign business bids on French companies.
It could be a risky move for Nokia, but if successful could mean a return to greater market share and profits.