The news caused the stock to jump Tuesday as high as $4.12 before closing at $3.86. It's the first time the stock has been above $4 since February.
The reasons why Huawei would be interested in Nokia are numerous.
Nokia has global relationships with over 600 carriers who push its phones. Those relationships were particularly helpful to Nokia before the market for feature phones died and these carriers could push the Nokia candy bars to the emerging markets. Nokia quickly sopped up all this cheap global market share.I'm sure Huawei would love to immediately have 600 carrier relationships through which it could start pushing their low-cost Android phones. (MSFT - Get Report) Windows Phones. Now Nokia is selling about seven million smart phones each quarter and struggling to maintain its market share. In a Financial Times article Tuesday, where Huawei chose to publicly muse about the idea of merging with Nokia, the company said it would be open to it only if Nokia stopped being reliant on Windows Phone. In other words, Nokia has to become an Android shop. It's unlikely there's going to be a Nokia-Huawei merger anytime soon. Why would Nokia suddenly decide to throw in the towel on Microsoft now? Huawei says that it hasn't been a success yet. Nokia is likely to want to give it more time.