In comments just before Chinese telecom firm Huawei introduces its new high-end smartphone, the Ascend P6, the company would consider an acquisition of Nokia Corp. (NYSE: NOK) to help Huawei become a global leader in smartphone manufacturing.
A report in the Financial Times cites Richard Yu, the chairman of the company’s consumer business group, said:

We are considering these sorts of acquisitions; maybe the combination has some synergies but depends on the willingness of Nokia. We are open-minded.

Yu expects the smartphone market to consolidate around three or four companies, and he wants his firm to be one of them. Obvious leaders are Samsung Electronics and Apple Inc. (NASDAQ: AAPL) on the hardware side, and Google Inc. (NASDAQ: GOOG) on the operating system side. Huawei is the third largest maker of smartphones when measured by volume.

Microsoft Corp.’s (NASDAQ: MSFT) “very small market share” makes its eventual success questionable, according to Yu. And the fact that Microsoft charges for Windows Phone, while Android is free, doesn’t help matters.

The Chinese firm tried to buy the assets of a bankrupt U.S. networking startup, and was denied permission to do so by the Committee on Foreign Investment in the United States (CFIUS), which was concerned about having a Chinese firm selling critical networking components in the U.S. And with the current issues around phone call monitoring by the U.S. and other governments, it is questionable that Huawei would get permission to acquire Nokia.

Nokia’s shares are reacting positively, as you might expect, up about 5.5% at $3.89 after peaking at up about 11% at $4.12. The stock’s 52-week range is $1.63 to $4.90.

Siemens has reportedly spoken to buyout firms TPG, Blackstone Group L.P. (NYSE: BX) and Kohlberg Kravis & Roberts & Co. (NYSE: KKR) about buying the entire company. As a publicly traded company, NSN could be worth as much as $9.4 billion, including debt.

The chief financial officer of Siemens has said that making networking equipment is not a business that Siemens sees itself as part of for the long haul, and that the company would like to exit this year.

Whether or not Nokia could put together an offer for the other half of NSN is questionable. But the networking venture has been good to Nokia’s bottom line in the past couple of quarters, and that is not something the company can say about most of its business. Operating profit at NSN rose 200% year-over-year in the fourth quarter of 2012 and was up 78% sequentially. First-quarter results were lower, but still positive.

Shares of Siemens are down about 1.1% in premarket trading this morning, at $105.45 in a 52-week range of $77.88 to $113.16.

Shares of Nokia are up 3.7%, at $3.66 in a 52-week range of $1.63 to $4.90.

According to its most recent annual filing with the SEC, Nokia had $4.6 billion in cash and $8.4 billion in short-term investments at the end of 2012. Buying Siemens’ share of NSN does not appear to be a good use of that liquidity. Siemens might want to see if it can interest a Chinese buyer, say, Huawei, already a competitor of NSN.

General Electric Co. (NYSE: GE) short interest fell 9.7% to 83.37 million shares. About 0.8% of GE’s float is now short.

Nokia Corp. (NYSE: NOK) saw short interest rise 8% to 222.34 million shares, about 5.9% of the company’s total float.

Bank of America Corp. (NYSE: BAC) short interest fell 14.9% to 138.59 million shares, which represents 1.53% of the company’s float.

Verizon Communications Inc. (NYSE: VZ) saw a 3.9% drop in short interest to 48.83 million shares, which represents about 1.7% of the firm’s float.

Alpha Natural Resources Inc. (NYSE: ANR) showed a rise of 0.5% in short interest, to 39.91 million shares, or about 18.3% of Alpha’s float.

McDonald’s Corp. (NYSE: MCD) showed a drop of 0.8% in short interest to 9.54 million shares, about 1% of the company’s float.

Apple Inc. (NASDAQ: AAPL) saw short interest fall 7.3% to 24.07 million shares, or 2.6% of the company’s float.

BlackBerry (NASDAQ: BBRY) saw short interest rise by 0.4% to 171.31 million shares, or 34.7% of the total float. Short interest continues to be reported under the company’s previous name, Research In Motion, but the stock symbol has been changed to BBRY.

Microsoft Corp. (NASDAQ: MSFT) posted an 8.2% increase in short interest to 102.8 million shares, about 1.4% of Microsoft’s float.

Dell Inc. (NASDAQ: DELL) short interest declined by 1.7% to 24.55 million shares. or about 1.7% of the company’s float.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) saw short interest decrease by 8.2% to 27.46 million shares, or 22.5% of the company’s float.

Cisco Systems Inc. (NASDAQ: CSCO) saw short interest rise by 1.2% to 54.74 million shares, or about 1% of the company’s float.

As the duel for Dell winds its way toward a conclusion, short interest in the company has dropped by about two-thirds from a recent high in late November 2012. Investors appear to believe that Michael Dell and his partners will succeed in their bid to take the company private for $13.65 a share.

Both Nokia and BlackBerry saw a rise in short interest, while shorts have abandoned Apple. At the end of April, nearly 42 million Apple shares were held short. The number has dropped by more than 40% in just one month. And that was before this week’s Apple pep rally — er, Worldwide Developer Conference.

Waze is an obvious fit for Google Maps as the service sends you real-time traffic updates from friends and other travelers ahead of you on a real-time basis.

Nokia Corp. (NYSE: NOK) acquired NAVTEQ for what said to be $8 billion or so at the time. Before NAVYEQ was acquired by Nokia, the company bought the website and public company called Traffic.com. That is now Traffic Pulse, and it serves approximately 50 U.S. cities.

Nokia likely would be down with a global stock market selling trend today. Still, its stock is down 2.5% at $3.49 in New York ADR trading, against a 52-week range of $1.63 to $4.90. Nokia’s market cap is now just under $13 billion, so its market value was at one point even lower than the purchase price of NAVTEQ was a few years ago.

The Google deal makes sense if it was affordable and adds to Google’s map dominance. Nokia’s new service that the location and commerce services full under is called HERE. The Google-Waze deal might cause HERE to become “used to be HERE” unless Nokia can catch a break.

Lenovo is the world’s number two personal computer maker, behind Hewlett-Packard Co. (NYSE: HPQ) and ahead of Dell Inc. (NASDAQ: DELL). In the United States, however, the company ranks only fifth in PC shipments, behind HP, Dell, Apple Inc. (NASDAQ: AAPL) and Toshiba.

Lenovo has a strong position in China’s smartphone market, where it trails only Samsung Electronics in market share, with 11% compared with 17% for Samsung. Lenovo also has entered the smartphone market in emerging markets like India and Indonesia, but it has made little or no headway in mature markets like the United States and Europe.

Acquiring NEC will not help. To grab a position in mature markets, Lenovo will have to acquire BlackBerry or Nokia Corp. (NYSE: NOK), both recognizable names. In emerging markets, the dominant name is “Android,” the smartphone operating system from Google Inc. (NASDAQ: GOOG).

A report from Canalys earlier this year indicated that no-name smartphone makers — of which there are more than a thousand in China — sell Android-powered phones for as little as $80, compared with the cheapest Apple iPhone that starts at around $495. Lenovo, which sells an Android-powered phone in China, could easily be in a position to displace Samsung at the top of the heap in China, without acquiring any other phone maker.

The firm’s desire to play in mature markets may be misguided, and acquiring NEC as an entry to these markets is surely misguided. But NEC would cost Lenovo just a third to a half of what Nokia or BlackBerry would cost, and the Chinese firm may figure that it could spend heavily on promotion to gain share in the mature markets. That is beyond risky and, in fact, borders on the hopeless.

AllThingsD reported on Ballmer’s plan:

What seems likely is an organizational structure that will focus on configuring Microsoft around devices and services, both in the enterprise and the consumer space, and simplifying its management. Currently, Microsoft has a rather convoluted set-up, with other major units such as Business Solutions, Online Services and Microsoft Office.

The logic behind the plan is powerful. Whether the plan will work is unlikely. All it does it take Microsoft’s product lines and move them into new management structures, which may be better suited to development and marketing. However,  highly successful development of major products has been stalled for years. And the mighty Microsoft marketing machine cannot market what it does not have — products that are revolutionary enough to gain it a new generation of very rapid sales growth, and a resurrection of its reputation as being one of the world’s great innovative organizations.

Microsoft’s large Servers and Tools division should have been married to its Business division a long time ago. Each markets to enterprises and companies. Together the two operations brought in more than $11 billion last quarter out of total revenue for the company of just over $20 million. They are the two largest divisions by sales and made up $6 billion of Microsoft’s $7.6 billion in operating profit for the same period.

Microsoft’s Entertainment and Devices division is where Ballmer has staked a great deal of the company’s future, as it moves beyond the Xbox to its own tablets and, perhaps eventually, its own smartphones. This operation should also be the home of Microsoft’s devices joint ventures, which include,at least its relationships with Nokia Copr. (NYSE: NOK) and Barnes & Noble Inc. (NYSE: BKS). Each of these deals were set as means to get more market share for Windows mobile, but both of the firms are struggling. Microsoft’s hope is that as it makes its hardware more interactive and part of it large global network of Xbox, Nokia and Nook users, it can become a more important part of the world’s use of next age hardware such as smartphones, tablets and home entertainment.

A new organization would orphan two divisions: Windows, Microsoft’s greatest legacy, and its search engine Bing, Microsoft’s largest strategic failure. Window’s presence, at least on PCs, will falter as PCs do. And search is a market that Microsoft has attacked again and again without success.

The reorganization plan, if it happens at all, will combine divisions that belong together. That may make Microsoft a more efficient corporation. But it does not dig the company out of the one hole it cannot dig itself out of, at least as it is constituted today. It needs at least one product that will transform the technology world the way Windows did a generation ago. If Ballmer has such a product, he is keeping it close to his vest, and a reorganization is nothing more than a smoke screen. But the smoke screen is more likely to cover a series of strategic missteps and not the tech world’s “next big thing.”

Microsoft wants the media and the consumer electronics consumer to believe that the Xbox One cannot be rivaled by any entertainment platform made by any company anywhere in the world:

From the biggest blockbuster games to the most popular TV shows to the best of the Web, Xbox One does it all. But this is just the beginning. Thanks to the power of the cloud, Xbox One will keep getting better, with more games, TV, movies, music, and apps launching all the time.

In and of itself, there is nothing particularly compelling from this outline of features to indicate why people who have moved their gaming activity to smartphones and tablets might return to the Xbox. Xbox One does have the ability to integrate a number of media sources at once. However, in the eyes of the public, that may not be enough to bring people back to a hardware platform that has existed, with some improvements, for more than a decade.

Sony’s new forecast for the future of its game division was close to pessimistic. Sony finds itself needing to defend its corporate structure after years of dismal results. The Japanese company has come under pressure to spin out its studio. Unfortunately, based on management’s new assessment of its other businesses, the studio may be the only part of Sony that has much value.

As part of a presentation about Sony’s future plans, executives said that as its PlayStation 4 (PS4) rolls out for the holidays:

Sony will target sales of 1 trillion yen and operating income margin of 2% in the game business in FY14. Going forward, Sony aims to significantly expand its business model around PS4, to transition the business to further growth in the fiscal year ending March 31, 2016 (“FY15”) and beyond.

The margin is atrocious, and it hardly makes Sony’s efforts in game consoles worthwhile at all.

Sony and Microsoft find themselves coming at the video game business from different points on the compass. The Japanese company has decided that, finally, it must tell investors the truth about its problems as it goes through wrenching changes, probably brought on from outside. Microsoft, on the other hand, can maintain what may be an illusion, at least for the time being. The world’s largest software company can still conquer the world beyond the PC it says, if only it can throw enough software and hardware at the problem. So far, that has not worked with new initiatives, which range from the Surface tablet to its Windows mobile partnership with Nokia Corp. (NYSE: NOK). But Steve Ballmer and Bill Gates have their game faces on. That will only last if Xbox One sales are remarkable.

Among mobile phone makers, Samsung Electronics claimed 23.6% of the global market, with sales of 100.66 million units in the first quarter. Nokia Corp. (NYSE: NOK) was second with sales of 63.22 million units for a market share of 14.8%. The difference is that Samsung’s share grew from 21.1% in the first quarter of 2012 and Nokia’s share fell from 19.7% a year ago.

According to Gartner Inc. (NYSE: IT), which compiled the data, Apple Inc. (NASDAQ: AAPL) sold 38.33 million units in the first quarter of this year, all of which are classified as smartphones. In the first quarter of 2012, Apple sold 33.12 million units.

Because total smartphone shipments grew from 147.02 million a year ago to more than 210 million this year, Apple’s share of the global market for smartphones fell from 22.5% to 18.2%. Samsung’s share of the smartphone market grew from 27.6% a year ago to 30.8% this year.

By operating system platform, Android from Google Inc. (NASDAQ: GOOG) grabbed a whopping 74.4% of sales, up from 56.9% a year ago. Apple’s iOS platform lost share, dropping from 22.5% a year ago to 18.2% this year. Amazingly, Android-based phones now outsell iPhones by four to one.

Gartner’s principal research analyst puts it squarely:

Apple is faced with the challenge of being increasingly dependent on the replacement market as its addressable market is capped. The next two quarters will also be challenging, as there are no new products are expected to be coming before the third quarter of 2013.

iPhone fans are legendary for their commitment to Apple. Some 70% of new iPhone sales are replacements for older model iPhones. Apple, though, is stuck with trying to grow while its share of the market slips. The company can innovate its way out of this, with another game-changing product like the iPod, the iPhone and the iPad. There is little sign, though, that such a product is on the horizon.

Apple’s shares are down 1.7% this morning at $436.36 in a 52-week range of $385.10 to $705.07.

The U.S. dollar index is trading up 0.38% today, now at 83.5910. The GSCI commodity index is down 0.2% at 627.87. WTI crude oil closed down 1%, at $95.1794.21 a barrel following the release of the International Energy Agency’s mid-term outlook predicting that growing U.S. crude oil will set off a “supply shock” that will drive down the price of crude. Brent crude trades down 0.2% at $102.61 a barrel. Natural gas is up 2.3% today at about $4.02 per million BTUs. Gold settled down 0.7% today at $1,424.50.

The unofficial closing bells put the DJIA up more than 123 points to 15,215.25 (0.82%), the NASDAQ rose nearly 24 points (0.69%) to 3,462.61, and the S&P 500 rose 1.01% or nearly 17 points to 1,650.34.

There were a several analyst upgrades and downgrades today, including:

KB Home (NYSE: KBH) cut to ‘market perform’ at Raymond James;
Cree Inc. (NASDAQ: CREE) cut to ‘hold’ at Jefferies;
Fusion-io Inc. (NYSE: FIO) raised to ‘buy’ at UBS;
Yahoo! Inc. (NASDAQ: YHOO) maintained on ‘Conviction Buy’ list and price target raised to $30 at Goldman Sachs; and
AllScripts Healthcare Solutions Inc. (NASDAQ: MDRX) raised to ‘buy’ at Citigroup.

Earnings reports since markets closed last night have resulted in some price changes for reporting companies as of the last half hour of trading today:

Copa Holdings SA (NYSE: CPA) is up 8.2% at $135.25 after posting a new 52-week high of $138.99 earlier today;
Renren Inc. (NYSE: RENN) is up 0.2% at $3.00;
Take-Two Interactive Software Inc. (NASDAQ: TTWO) is up 1.3% at $16.60 after posting a new 52-week high of $17.54;
Pan American Silver Corp. (NASDAQ: PAAS) is down 1.4% at $12.43; and
SolarCity Corp. (NASDAQ: SCTY) is down 12.2% at $31.50, and we’ve noted something to watch for that could help this company and probably many other alt energy players.

Before markets open tomorrow morning we are scheduled to hear earnings from Agilent Technologies Inc. (NYSE: A), Dillard’s Inc. (NYSE: DDS), Primo Water Corp. (NASDAQ: PRMW), Computer Sciences Corp. (NYSE: CSC), Deere & Co. (NYSE: DE), First Majestic Silver Corp. (NYSE: AG), and Macy’s Inc. (NYSE: M).

Some standouts among heavily traded stocks today include:

Sony Corp. (NYSE: SNE) is up 9.6% at $20.70, after posting a new 52-week high of $22.22 earlier today. The consumer electronics firm is being encouraged by activist investor Daniel Loeb to break into pieces, which may not be the best idea he’s ever had.

Nokia Corp. (NYSE: NOK) is down 5.5% at $3.63. The mobile phone maker introduced a new phone today. Investors apparently were not impressed.

Groupon Inc. (NASDAQ: GRPN) is up 7.8% at $6.86. The daily deals company had no news today, but heavier than normal volume indicates demand was good for the stock.

Stay tuned for Wednesday. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 8:30 a.m. – Producer price index
• 8:30 a.m. – Empire State manufacturing survey
• 9:00 a.m. – Treasury International Capital (TIC) data
• 9:15 a.m. – Industrial production
• 10:00 a.m. – Housing market index
• 10:00 a.m. – E-commerce retail sales
• 10:30 a.m. – EIA weekly petroleum status report

While BlackBerry launched the Q10 globally today, actual availability will vary. In the United States, T-Mobile US Inc. (NYSE: TMUS) will offer the Q10, but no ship date has been set.

Providing even more hype with an equivalent lack of hardware, BlackBerry also announced its Q5 mobile device today, another BB10 phone with a keyboard. This is the budget version of the Q10 designed specifically for emerging markets.

But wait, there’s more. Nokia Corp. (NYSE: NOK) launched a new member of its Lumia 920 family, the Lumia 925. Like the BlackBerry phones, availability in the United States will follow availability in other countries by about a month. The Lumia 925 will be available through T-Mobile exclusively and on a no-contract basis. The estimated price for the phone is about $600, but that will vary widely, depending on local taxes and so on. Nokia launched a Lumia 928 phone earlier this month exclusively for Verizon Wireless. The Lumia phones all use the Windows Phone operating system from Microsoft Corp. (NASDAQ: MSFT).

BlackBerry’s Q5 targets a low-cost-of-entry market while Nokia’s Lumia 925 is a pricier entry that will target the market now dominated by Samsung and Apple Inc. (NASDAQ: AAPL). Given that T-Mobile currently sells the iPhone, Nokia is going to have to price the phone aggressively to poach customers away from the two market leaders. The Q5 avoids a lot of this problem by fighting it out for share in emerging markets where the Nokia brand is well known and popular.