A former leader in the mobile phone sector, Finland’s Nokia encountered problems after the 2007 launch of smartphones, particularly Apple’s iPhone, as well as devices running on Google's Android operating system. In February 2011, Nokia formed a strategic partnership with Microsoft, with Nokia smartphones replacing Nokia’s traditional Symbian operating system with a mobile system from Microsoft. Microsoft bought Nokia's handset business for 5.44 billion euros in September 2013.
Nokia's Stephen Elop seen rejoining Microsoft as CEO
Role in takeover of Finnish mobile-phone unit sees Elop lead race to be the new boss
Bloomberg in San Francisco
Stephen Elop, already a bookmakers' favourite to take over as Microsoft's next leader, just boosted his chances by helping orchestrate the US$7.2 billion deal that makes him a senior executive at the software maker he once helped run.
The 49-year-old Canadian, who has been chief executive at Nokia for three years, will move back to Microsoft as it buys the Finnish company's mobile-phone unit.
The one-time head of the software maker's business division returns with experience competing head-on in mobile devices against Apple and Google.
Microsoft needs a leader to help it add market share in smartphones, tablets and search as Steve Ballmer prepares to step down. While Elop did little at Nokia to erode Apple and Google's lead, he was a loyal Microsoft partner who negotiated the agreement that landed Windows on millions of phones.
"Elop is on the short list of possible [CEO] candidates," said Sami Sarkamies, an analyst at Nordea Bank in Helsinki. "He has the right experience from working both inside and outside the company."
Elop nonetheless has detractors who decry his failure to make Nokia profitable, and its shares have declined by half on his watch. Ballmer, one of Microsoft's largest owners with about 4 per cent of its outstanding shares, declined to say whether Elop was a candidate to succeed him as chief executive.
"Given the performance of Nokia under Elop's stewardship, getting the CEO job would seem a pretty big reward," said Charles Golvin, an analyst at Forrester Research. "From a financial perspective, it was not a stellar performance."
Microsoft has said it will consider internal and external candidates to replace Ballmer. Tony Bates, Satya Nadella, Qi Lu and Terry Myerson are the other leading choices among Microsoft's executives, according to people with knowledge of the matter, who asked not to be identified.
If Microsoft brings in a leader from outside, analysts have suggested candidates including eBay chief executive John Donahoe and Sheryl Sandberg, Facebook's chief operating officer.
At Nokia, Elop took over as the mobile-phone pioneer's market-share losses to the iPhone and Google's Android devices threatened to accelerate.
At the time, he likened Nokia's position to a person standing on a burning oil platform on the verge of being engulfed in flames, facing the option of staying aboard or jumping into the ocean to have a chance to survive.