Nokia is fending off a reported hostile takeover attempt that could dramatically alter the wireless network equipment market.

The report quickly sent shares of the struggling company up almost 12% and, although those gains have waned since, company stock is still up 48% from a 52-week low it hit last month. “Nokia does not comment on market rumors,” a company spokesperson told SDxCentral. 

The hostile takeover bid, which was reported by TMT Finance and cited by Reuters, follows a late February report from Bloomberg that claimed the company was considering potential asset sales or mergers to improve its outlook. Nokia dismissed that report as speculative at the time and declined to comment further. 

The Finnish vendor has been struggling for at least a year, slashing its profit outlook through 2020, and blaming high component costs and heightened competition amid early deployments of 5G. The company cut about 5,000 jobs during 2019, cut nother 180 jobs in January and hinted at more to come. 

Nokia’s challenges have also sent top leadership heading for the exits. CEO Rajeev Suri last month announced that he will be leaving his position on Aug. 31 and Chairman Risto Siilasmaa left his role at the end of March. 

Much of the company’s current 5G product portfolio carries high costs that have impacted its profit margin, but the company last week revealed second-generation radio access network (RAN) gear that features a new system-on-a-chip (SoC) that it hopes will reverse that trend with greater performance at lower costs. Nokia said the new hardware will comprise 35% of its 5G shipments by the end of 2020, 70% by the end of 2021, and all 5G products it delivers by the end of 2022.

The hostile takeover bid isn’t surprising, particularly since it was previously reported to be “exploring the sale of some assets in order to retrench and accelerate better performing businesses,” said Will Townsend, senior analyst at Moor Insights & Strategy. Nokia’s enterprise division, which focuses on private networks for larger enterprises, and its optical business are both standouts, he said. 

However, Nokia has the resources to fend off a hostile takeover and it will emerge from its challenges largely intact, he said. “New leadership was a positive move to invigorate their go to market” strategy and it has “access to credit facilities to make needed roadmap investments to shore up some of [its] previous gaps.”

Nokia is likely being targeted for a takeover by a private equity firm but there are “possible merits of a combination with Ericsson,” Townsend said. The longtime competitors are in close geographic proximity and have complementary strengths, including Nokia’s efforts in private and optical networking, and Ericsson’s position on RAN, SDN, and artificial intelligence (AI), he added. 

Such a combination would be “mutual” rather than “hostile,” Townsend said, adding that he doesn’t foresee any fit with Huawei or Samsung.

Despite its challenges, Nokia has been busy on the product and service development front. The vendor in February announced a pair of cloud-native software applications designed to help carriers improve network operation and management. And last month it bolstered its position in IoT with a new managed service platform with support for 5G and edge computing, and unwrapped a series of AI and machine learning features designed to increase network automation.

Pekka Lundmark, who currently serves as president and CEO of Fortum, an energy company also headquartered in Espoo, Finland, has been tapped to lead Nokia on Sept. 1.