Last month, I reported that Nokia (NYSE:NOK) intended to nearly double its stake in handset software developer Symbian, by buying the 31% interest in Symbian currently held by Psion. I also pointed out that Nokia may not be able to buy Psion's entire stake.
Symbian's charter grants Nokia's co-owners in Symbian, Siemens (NYSE:SI), Ericsson (NASDAQ:ERICY), Sony Ericsson, Panasonic (a subsidiary of Matsushita Electric (NYSE:MC)), and Samsung, the right to buy into Psion's stake in proportion to their interest in Symbian. The more co-owners that exercise this right, the fewer shares will remain for Nokia to purchase.
Two weeks ago, the question almost became moot when Psion shareholder, Phoenix Asset Management Partners, demanded that the Symbian sale be cancelled. (Phoenix wanted Psion to push for a Symbian IPO instead.) But that threat to Nokia's plans, too, collapsed, when Phoenix's proposal was voted down at Psion.
Which brings us back to the original threat to Nokia's bid -- its Symbian co-owners. Yesterday, Nokia's Swedish archrival, Ericsson, confirmed that it and its joint venture partner in Sony Ericsson, Sony (NYSE:SNE), would be exercising their full pre-emptive rights in an attempt to limit Nokia's role in running Symbian.
But Sony's support is just a start. After all, its proportional control over Symbian is currently a mere 0.75%. Ericsson needs to sign up co-owners with more substantial stakes in Symbian, if it is to keep Nokia under 50%. (Here's the math.)
That may be what Nokia was counting on all along. That contrarian view has been taken by one Nokia-watcher on the Fool's Nokia discussion board. And Nokia CEO Jorma Ollila's statement, which said he would be pleased to see the co-owners increase their stakes in Symbian, also supports it.
After all, even if Nokia acquires the full 63% it originally offered to buy, it would not have full control over Symbian -- Symbian's charter requires a 70% majority for full control. Moreover, co-owners Ericsson and Siemens have both declared their displeasure with the idea of Nokia getting even a "symbolic" majority. Nokia must have believed that those two, at least, would exercise their pre-emptive rights.
So, perhaps this is what Nokia hoped for all along -- for Ericsson to twist arms and cajole the other co-owners to ante up and demonstrate their commitment to the Symbian platform -- to the exclusion of competing platforms such as the one that Microsoft (NASDAQ:MSFT) and Motorola (NYSE:MOT) are now working up.
Maybe Nokia was just bluffing the whole time.
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Fool contributor Rich Smith owns no shares in any company mentioned in this article, although he has owned shares of Nokia in the past.
