Huawei Keeping an Open Mind on Acquisition of Nokia

In comments just before Chinese telecom firm Huawei introduces its new high-end smartphone, the Ascend P6, the company would consider an acquisition of Nokia Corp. (NYSE: NOK) to help Huawei become a global leader in smartphone manufacturing.
A report in the Financial Times cites Richard Yu, the chairman of the company’s consumer business group, said:

We are considering these sorts of acquisitions; maybe the combination has some synergies but depends on the willingness of Nokia. We are open-minded.

Yu expects the smartphone market to consolidate around three or four companies, and he wants his firm to be one of them. Obvious leaders are Samsung Electronics and Apple Inc. (NASDAQ: AAPL) on the hardware side, and Google Inc. (NASDAQ: GOOG) on the operating system side. Huawei is the third largest maker of smartphones when measured by volume.

Microsoft Corp.’s (NASDAQ: MSFT) “very small market share” makes its eventual success questionable, according to Yu. And the fact that Microsoft charges for Windows Phone, while Android is free, doesn’t help matters.

The Chinese firm tried to buy the assets of a bankrupt U.S. networking startup, and was denied permission to do so by the Committee on Foreign Investment in the United States (CFIUS), which was concerned about having a Chinese firm selling critical networking components in the U.S. And with the current issues around phone call monitoring by the U.S. and other governments, it is questionable that Huawei would get permission to acquire Nokia.

Nokia’s shares are reacting positively, as you might expect, up about 5.5% at $3.89 after peaking at up about 11% at $4.12. The stock’s 52-week range is $1.63 to $4.90.