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Microsoft flirted with buying Nokia, WSJ says

The two companies had advanced discussions about a deal, but the talks have faltered, according to the Wall Street Journal.

Nokia House, the company's headquarters in Espoo, Finland.
Roger Cheng/CNET

Microsoft was in deep discussions to acquire Nokia, but talks have broken down, according to the Wall Street Journal.

With such a deal, Microsoft would gain direct control over the mobile device maker, which has been the marquee partner for the software giant's fledgling Windows Phone operating system. Such a deal could shake up the smartphone business in the same way that Google did when it acquired Motorola Mobility.

Nokia and Microsoft both declined to comment on the report.

Both Microsoft and Nokia had been struggling to regain their once dominant positions. Microsoft has been pushed back on its heels with a weakening PC market and tepid reception to its new Windows software. Nokia has fallen far from its once-lofty perch atop the cellphone market, and its new line of Windows Phone-powered Lumia smartphones has yet to break out.

Microsoft walked away from the deal because of the price and Nokia's weak position in the market, according to the Wall Street Journal. While Nokia remained the No. 2 cellphone maker by market share, it doesn't rank in the top five when it comes to smartphones, the fastest growing and most lucrative part of the business.

The companies, however, were reportedly close to an oral agreement about a deal, the Wall Street Journal said.

While Windows Phone has made some progress in the market, it still lags far behind Apple's iOS and Google's Android operating system. Nokia has already been the most fervent supporter of Windows Phone, relying solely on the OS for its smartphones at a time when others have opted for the more popular Android OS.