Stephen Elop helped Microsoft get Nokia’s handsets for cheap—but don’t expect him to be its next CEO

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Nokia’s agreement to sell its devices business to Microsoft has raised eyebrows—not least because Nokia CEO Stephen Elop, who will move across to Microsoft to run that business, joined Nokia just three years ago from Microsoft. Already marked out, even before today’s news, as among the favorites to replace outgoing CEO Steve Ballmer, Elop’s chances of getting the top job would now appear to be outstanding. But that misses a couple of points, highlighted by the chart of Nokia’s stock market valuation above.

1. Yes, Elop made Nokia’s handset business much cheaper for Microsoft to buy

There has long been speculation that Elop, who headed Microsoft’s Business Division before jumping to Nokia in Sept. 2010, was a Trojan horse for Microsoft. The theory was that from within Nokia, he could negotiate sweetheart deals for Microsoft—an allegation that surfaced when in 2011 Nokia committed to focus on using Microsoft’s software in its smartphones. As the chart above—which starts when Elop joined Nokia—shows, the company is worth roughly one-third what it was when he took over. Nokia shares are up about 40% today on the announcement, but that still leaves them well short of their pre-Elop levels. As part of the deal, Elop returns to Microsoft to run its devices and services activities, which surely won’t lessen the allegations that he was working for Microsoft all along.

2. But Nokia’s performance during Elop’s tenure doesn’t support the case for his being Microsoft’s next CEO

Ballmer made a comment today suggesting that Elop is a possible candidate to replace him. “Stephen will go from external [candidate] to internal,” Ballmer told the Seattle Times in an interview about the latest deal. But Nokia’s track record during Elop’s tenure would seem to undermine his chances. First, there’s the striking Nokia stock underperformance. And then there’s the collapse in the Finnish company’s market position. Its share of the global smartphone market has fallen from 34.2% in 2010 to just 3% in the first half of this year, according to Gartner research. It’s hard to imagine Microsoft’s increasingly antsy investors warmly welcoming a new leader who made that happen.

So in order to believe this was all part of a conspiracy to bring Nokia down so Microsoft could feast on its remains—an outcome that was by no means assured when Elop took over at Nokia—you’d have to believe Elop was willing to risk his career and reputation by being seen as the man who presided over Nokia’s catastrophic decline.