Wall Street initially panned the Nokia-Microsoft smartphone partnership announced early Friday, sending shares of the Finnish mobile device maker down 14 percent by day's end. Then investors had a weekend to sleep on it. (Also see: Microsoft-Nokia: A marriage of mobile mediocrities) When they woke up Monday, investors decided they really didn't like the deal, sending Nokia shares (NYSE: NOK) down another 47 cents, or 5 percent, to 8.89 in early afternoon trading. Since closing last Wednesday at 11.73, NOK is down 23 percent. (The bigger stock picture is even worse, which we'll get to later.) The not-so-surprising announcement by chief executive Stephen Elop that Nokia would try to reverse its smartphone market slide by adopting Microsoft's Windows 7 mobile OS came days after the release of an internal memo to employees from Elop in which he likened Nokia to a person standing on a burning oil platform, faced with the choice of certain doom or a plunge into the icy waters of the unknown. Of course, even as Elop was encouraging Nokia employees to join him into that unknown, he already knew the icy waters were Microsoft, another company struggling in a market dominated by Apple's iPhone, devices powered by Google's Android OS, and the Business Cult of BlackBerry. While Microsoft and Nokia certainly have some impressive combined resources -- Nokia's overall brand name, reach and market share in mobile devices, Redmond's relatively innovative Windows Phone 7 platform -- the macro view is that of two slow-moving companies trying to keep up with swifter, more agile competitors. Even worse, there are no guarantees Nokia's first WP7 smartphones will be out before the end of the year. How much further ahead will Apple and Google be by then? How many fewer smartphone customers up for grabs? That's what investors are reacting to, and that's what makes Elop's sales job to employees and investors so difficult. According to ABC News, Nokia employees on Friday walked "out from work en masse" to communicate their displeasure with the deal. Whether it's a dislike of Microsoft, resentment over Nokia abandoning its own Symbian mobile OS, or a combination of both, Nokia employees are going through "an emotional journey," as Elop put it in his initial efforts to sell his plan. So too are investors, and right now they're bouncing between the stages of anger and disbelief. Until there's proof that the partnership with Microsoft will pay off, Nokia's stock is probably doomed to indefinite limbo. With shares close to the 52-week low of $8, most investors would lose money selling in the near future. Imagine buying NOK back in November 2007, near its peak of 42.22. You'd face the grim choice of selling at a big loss now or waiting interminably to see if your investment has even a faint glimmer of hope. Not an enviable position to be in.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.