1 Aug 2012

[News Update] Nokia Surges on Lenovo Buyout Rumor; Lenovo Denies Interest

Nokia CEO Stephen Elop

According to a report from Reuters, Nokia's stock price has jumped by more than 10% on rumors of Lenovo's interest in buying the Finnish cellphone maker. Volumes were nearly double that of Nokia stock's 90 day daily average. Gianfranco Lanci, head of Lenovo's EMEA operations categorically denied any interest in Nokia.

This is most likely a false rumor, and according to former Nokia executive Juha-Pekka Helminen, it also bears the characteristics of a short squeeze, i.e. the stock price rise is attributed to short-sellers covering their positions.

From a strategic perspective and given Nokia's recent troubles, it makes little sense for Lenovo to acquire Nokia, given that their hardware business seems healthy. Nokia's hardware capabilities would give a big boost to their hardware capabilities in the smartphone space, but I doubt Nokia's Windows Phone strategy holds much appeal to buyers.