Nokia chief dismisses Samsung bid rumours

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Stephen Elop backs Windows Phone strategy despite plunges in firm's share price and forecasts of falling market share

Nokia's chief executive Stephen Elop dismissed as "baseless" rumours that the electronics giant Samsung is bidding for the company in London on Thursday.

Speaking at the Open Mobile Summit, Elop said that "all the rumours are baseless" and reiterated Nokia's intention to create a third smartphone ecosystem to compete with Apple's iPhone and Google's dominant Android mobile operating system.

He said that Nokia designers are working on designs for new phones which will use Microsoft's Windows Phone operating system, which he has previously said will come out later this year using the so-called "Mango" version. That is due some time in the autumn.

Earlier this week rumours began to circulate that Samsung would bid for the Finnish mobile company, which still makes more mobile handsets than any other, but which has seen its stock pummelled after it warned at the end of May that it might make not make any profit on its mobile business this quarter.

Previous buyout rumours had suggest Microsoft would bid for Nokia, but the company previously denied those too.

Elop insisted that Nokia continues to have a huge following in many emerging markets such as Asia.

It also emerged on Thursday that Nokia's chief technology officer, Rich Green, is taking a leave of absence from the company. Officially it is for personal reasons, though other reports brought conflicting explanations. The Wall Street Journal suggested it was for medical reasons, but the Economic Times said Green had disagreed with Elop, who took over as chief executive in September 2010, over the scrapping of the MeeGo platform.

But Richard Windsor, a marketing analyst from the brokers Nomura who saw Elop speak, told the Guardian that he thought the company faced at least four more quarters of significant problems.

"In smartphones, any company that loses market share has gone on to have significant problems," Windsor said. He thinks that Nokia will face dwindling market share which will bring its margins and profits under enormous pressure, particularly as Chinese handset makers produce cheaper versions of Android phones selling for less than $200.

"Nokia is strongest in markets where it hasn't yet been challenged by sub-$200 handsets," he added. Nokia's smartphones, of which it sold 24m in the first quarter, had an average selling price (ASP) of €147 (£130). By contrast most smartphones have an ASP of about $300, while Apple's iPhone has an ASP of $660.

"The high end is gone for Nokia – it can't get it back," said Wilson. "And it won't be able to get the price of its Windows Phone devices down low enough to make a profit. The hardware requirements of Windows Phone are quite hefty [Microsoft specifies a 1GHz processor, faster than any other platform] and so they'll never be able to get the price low enough."