A former Microsoft employee reports that the company has been negotiating with Nokia, reports tech.co.uk:

the company is close to forming a partnership with Nokia that will see the phone manufacturer release windows mobile smartphones to the masses. Without getting too in-depth, the former executive said an agreement could see Nokia's support for Microsoft technologies "extend completely" to include Windows Mobile.

Personally, I can't see why Nokia, the dominant market share holder, would work with Microsoft, a company who would love to be in the Finnish maker's position. It looks like that only Microsoft will fully benefit from such an arrangement, through increased exposure for its Windows Mobile OS.