As per the article, with italic emphases mine: "A year ago, Nokia sold its struggling handset business to Microsoft Corp. This week's media reports were focused on the idea that Nokia may buy Alcatel-Lucent's mobile networks arm, which would be a simpler deal to carry out than a full combination but would leave the French firm much smaller."

In short, Nokia sold their iconic and consumer-facing handset division (what they used to call their "Device & Services Business"[1]) to Microsoft in November 2013, although the sale didn't officially complete until April 2014. However, after the divestiture Nokia still existed as a corporate entity with the majority (over 90%) of the revenues coming from their Nokia Solutions and Networks division (NSN) [2]. NSN and ALU's mobile networks division are direct competitors in the telecommunication equipment and software market, so a potential merger makes sense depending on which side of the table you're on.

[1] http://company.nokia.com/en/news/press-releases/2014/04/25/n...

[2] http://www.economist.com/news/business/21590363-after-sale-i...

It does indeed make sense for Nokia. Specially in the context of them considering selling off Here maps. Seems there's a sentiment at Nokia to focus on their core business to regain shareholder confidence(and hopefully, I suppose, improve the junk status of their stock).

And both Nokia and A-L seems to be taking a beating for Huawei.

Many people seem to have trouble grasping that Nokia still exists as a separate entity after being "sold" to Microsoft.

Think about it like this: IBM made laptops. IBM sold the laptop division to Lenovo. Lenovo now makes laptops using IBM's old brandname (Thinkpad). IBM still exists and is doing other stuff.

Ergo, Nokia made phones. Nokia sold the phone division to Microsoft. Microsoft now makes phones using Nokia's old brandnames (Lumia and Asha). Nokia still exists and is doing other stuff.

Agreed, but people Nokia's handsets were traditionally sold under the Nokia brand name, not Lumia or whatnot. Everybody knew that there was a lot more to IBM than ThinkPads, but most people didn't realize that Nokia had a huge business selling network switching infrastructure to telcos.

I think people just didn't realize that nokia wasn't just a company that made phones (I didn't know that until just now at least).

Understandable. Similarly Sony is a financial services company , it's core business is insurance.

Basically, conglomerates are very confusing.