LONDON Addressing Nokia Oyj (NOK1V.HE) employees in January 2011, Chief Executive Stephen Elop - at that point only four months into the job - dramatised the company's predicament by comparing it to standing on a burning platform.
Nearly a year and a half on, and with Nokia's Lumia mobile phone range failing so far to revive sales, its position still looks frail. Its shares have lost 90 percent in five years and its debt is rated junk by two of the three major ratings agencies.
Might Microsoft Corp (MSFT.O), Elop's former employer and whose software Lumia is based on, have to step in to help Nokia out, seeing the Finnish company as a valuable point of entry into the cellphone market?
Analysts have attributed Nokia's decline in large part to its late response to Apple Inc (AAPL.O), whose iPhone redefined the smartphone market in 2007, and some see a marriage with Microsoft as possibly a last chance to turn the group around.
For Microsoft the relationship is important, because Nokia was its first major break into the smartphone market after a decade of heavy investment. During that period other cellphone makers either chose to use their own software - as did Apple - or favoured Google Inc's (GOOG.O) Android.
"If Nokia ends up in financial difficulties I believe the helping hand would be there," said Sami Sarkamies, an analyst at Nordea.
Nokia and Microsoft declined to comment.
Microsoft is already paying Nokia $1 billion a year to use its software on Lumia smartphones. And investment bankers familiar with the technology sector said the support could extend well beyond that amount, if Nokia's problems intensify.
"I don't see Microsoft owning Nokia, but it would definitely provide financing to the tune of a couple of billion dollars," said one veteran technology banker.
Any Microsoft support for Nokia would be more likely to take the form of an inter-company loan, or an equity stake, rather than a full takeover, a second banker said.
Even though Microsoft has nearly $60 billion of cash on its balance sheet, the company has traditionally steered clear of the hardware business, because it does not want to compete with the manufacturers that use its software.
Yet other priorities may override that consideration.
At the same time, some bankers said they thought Nokia, which has a market value of 9.3 billion euros, was an unlikely target for other cellphone manufacturers because of its deep integration with Microsoft.
"I don't see it as a target for private equity either. It is still too expensive and too volatile," said a third banker. "You would have to be prepared to catch a falling knife."
With a full takeover of Nokia seeming unlikely, some bankers and analysts were equally sceptical about asset spin offs as a way for the company to raise some much-needed liquidity.
Nokia is in talks to sell its British luxury subsidiary Vertu, which makes some of the world's most expensive mobile phones, a source familiar with the company's strategy told Reuters previously.
Yet Vertu is expected to generate only a few hundred million euros if it is sold to private equity firm Permira. And bankers said Goldman Sachs' mandate to sell the business did not extend to any other Nokia assets.
"Banks are pitching ideas to them like they always do, but I'm not aware of any other mandates to sell Nokia businesses or any wider mandate to advise the company on options," the first source said.
Nokia's other assets that could be of interest to potential buyers include its intellectual property portfolio, which a fourth banker described as "the best in the industry".
Yet Elop told the company's shareholders' meeting on May 3 he was not planning any wider patent sales. He also said he saw the location and mapping business, built on the $8.1 billion acquisition of U.S. firm Navteq, as a core asset the firm would aim to keep, despite some expectations it could be sold.
The fourth banker said Microsoft was likely to urge Nokia not to put its patents on the block in any case, because it would not want them to fall into the hands of Google.
The only other asset of any size that Nokia could potentially sell would be its half of Nokia Siemens Networks (NSN).
Yet its parent companies Nokia and Siemens (SIEGn.DE) tried to sell NSN last year to private equity, a process that collapsed over price, and there seems no obvious reason why they would be more successful now.
For Elop, there remain painful decisions to secure his legacy as head of what once ranked as one of Europe's biggest technology success stories.
"Elop was not hired as a boss for a burning platform," said John Strand, founder and CEO of Danish consultancy Strand Consult. "He put the platform on fire."
(Additional reporting by Tarmo Virki, Josephine Cox, Leila Abboud and Bill Rigby.; Editing by David Holmes)
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