Nokia Corp.'s decision to sell its handset business to Microsoft Corp. and focus on wireless-network equipment is the Finnish company's latest attempt in its 148-year history to reinvent itself during a crisis. It also marks the effective end of a national champion and onetime global tech giant.

'This is end of an era in Finland,' Jan Vapaavuori, the country's minister of economic affairs said Tuesday. The deal with Microsoft will have a 'mental effect,' he said, since Nokia long has been an important international brand with Finnish roots.

Founded in 1865, when engineer Fredrik Idestam set up a wood-pulp mill in southwestern Finland, Nokia has had a history of radical shifts in its business. The first was at the turn of the 20th century, when the company moved into making rubber boots and other products.

In 1967 the company merged with partner Finnish Cable Works, which had been developing radio telephones for the country's army. Nokia in the early 1980s went on to become one of the first players in the cellphone industry

It introduced the Mobira Senator car phone in 1982, only a year after the creation of the Nordic Mobile Telephone service, the world's first international cellular network.

Nokia unveiled its first hand-held phone in 1987, the Mobira Cityman, the same year that GSM was adopted as the European standard for mobile networks.

But Nokia ran into financial trouble at the end of the 1980s after acquiring unprofitable television-set factories in Europe.

In 1992 Jorma Ollila, a former Citibank executive, became chief executive and decided to focus on telecommunications. That worked-for a while. Nokia's success boosted its share price, and at its peak in 2000, the company was valued at 303 billion euros($400 billion at today's exchange rate).

But misplaced bets would change Nokia's fortunes.

Nokia executives predicted that producing traditional cellphones would be unprofitable by 2000, so the company in the 1990s started spending billions of dollars to research mobile email, touch screens and faster wireless networks. Nokia introduced its first smartphone, the Nokia 9000, in 1996-more than a decade before the first iPhone was released.

U.S. rival Motorola Inc. scored a world-wide hit with the thin Razr flip phones, however, and Nokia faced criticism from investors over its focus on high-end smartphones.

Former Nokia finance chief Olli-Pekka Kallasvuo took the helm from Mr. Ollila and merged Nokia's smartphone and basic-phone operations, with the result that the more-profitable basic-phone business started calling the shots. Returning to a focus on traditional phones, Nokia found itself at a disadvantage when the iPhone was unveiled in 2007. As Apple Inc.'s AAPL +0.28% phone gained popularity, Nokia tried to play catch-up.

Nokia's relationship with Microsoft began as Canadian Stephen Elop took the reins of the Finnish company in 2010 and decided to scrap the company's effort to revamp its aging Symbian operating system, opting instead for Microsoft's Windows platform. Nokia cut tens of thousands of jobs, sold its elaborate seaside headquarters in Espoo, Finland, and scaled back research and development, the company's onetime jewel. Last year the company closed its last remaining phone factory in Finland.

Meanwhile, the handset business has struggled.

While Nokia's flagship Lumia series has received good reviews, the company has failed to make a dent on its main competitors, Apple and Samsung Electronics Co. Nokia's second-quarter revenue from phone sales was less than 25% what it was in the first quarter of 2011, when Nokia's tie-up with Microsoft was announced.