Nokia’s chief executive Stephen Elop is preparing a major shakeout of the company’s executive board and the recruitment of a new head of its research and development division and of its operating systems division, according to reports.

The company’s stock has already risen by around 10% in the past week on the expectation that a tieup between Nokia and Microsoft, Elop’s former employer until last September, will be announced later this week which would see the US software giant providing the operating system for high-end smartphones in some parts of the world.

The Wall Street Journal reported on Sunday night that Elop is finalising his plans for the shakeup and that they will be announced on Friday at a meeting with analysts in London.

Elop will brief the executives on the Thursday, the WSJ reported.

The need for a revamp of the Symbian operating system brand, which Nokia presently uses to sell smartphones around the world, is seen as increasingly urgent. Though Nokia dominates the market for lower-end “feature phones” and has maintained the largest single market share in the smartphone market for some years, it is now under threat principally from Google’s Android operating system and from the cumulative incursions of Apple and RIM in the US market.

In the fourth quarter of 2010, Symbian’s share of the smartphone market fell from 41% a year ago to 31%, though the smartphone market overall roughly doubled to around 100m units worldwide, and the company sold a total of 100m smartphones in the year, up 48% on 2009.

“The [remaining Nokia executives] have to come up with something bold”, one person familiar with the thinking told the WSJ, because “Symbian continues to decline”.

A tieup with Microsoft, even only in the US, could benefit both sides. Nokia has a tiny share of the US smartphone market, estimated at 2%, while Windows Phone 7, launched only in October, has yet to gain any widespread traction with customers or mobile carriers.

Nokia has also seen falling profits over the past three quarters and warned that the present quarter will not be strong either.

The speculation of a tieup had pushed Nokia’s shares up by 10% over the past week.

The expectation follows analysts’ urging of Nokia to form an alliance with Microsoft on smartphones. Some suggested that it should abandon Symbian, which it presently uses across its smartphone and feature phone range, on all high-end phones; others that it should stick with Symbian outside the US, and just use Microsoft’s platform there.

There is little expectation that Nokia will go with Google’s Android mobile operating system for smartphones, however. Oracle, which bought Sun Microsystems and its Java code, is suing Google claiming copyright infringement of Java in the implementation of Android; the case also opens any company that incorporates Android up to being sued (though this does not indicate whether the case has any merit).

Discussing the fourth-quarter results in January, Elop said that the company was open to “create and/or join other ecosystems”.

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