Exit of Nokia’s Dealmaking Chairman Stirs Talk of Strategy Shift

(Bloomberg) -- Nokia Oyj said Chairman Risto Siilasmaa will step down after eight years in the role, stirring speculation about deeper potential changes at the network equipment maker.

Siilasmaa is the second high-profile figure to leave the Finnish company since an October profit warning. He will be replaced in April 2020 by Sari Baldauf, a former head of its networks division, Nokia said in a statement.

The move comes less than two months after Chief Executive Officer Rajeev Suri shocked investors by cutting Nokia’s profit outlook and suspending the dividend, warning that heavy investment to catch up with competitors in 5G would delay an earnings boost from the technology.

Nokia’s Swedish arch-rival Ericsson AB has increased spending on 5G research and development while trying to rein in other costs. Nokia has also focused on efficiency gains, while promoting a so-called end-to-end product offering in a bid to lure more network technology customers.

Siilasmaa’s departure “opens the door for some kind of strategy review,” said Nordea Bank analyst Sami Sarkamies by phone. “They’ve been quite vocal about the end-to-end strategy, but that may be a topic the new chairman will revisit once she has started.”

Nokia shares closed up 0.3% in Helsinki after earlier rising as much as 3.2%.

Exit of Nokia’s Dealmaking Chairman Stirs Talk of Strategy Shift

The company’s acquisition of French-U.S. rival Alcatel-Lucent in 2016 led to culture clashes and a succession of senior management changes. Its shares have lost more than a third of their value this year as it struggles with the shift to 5G.

Exit of Nokia’s Dealmaking Chairman Stirs Talk of Strategy Shift

Chief Operating Officer Joerg Erlemeier is on the way out after the profit warning and Nokia’s decision to discontinue the role. Earlier this year, Nokia Technologies president Maria Varsellona left to become General Counsel at ABB Ltd., and Nicolas Bouverot, vice-president for the South Asia region, left for a job at Thales SA.

The company’s mobile network business has also seen managerial turbulence, with three managers leaving in as many years. The unit’s current president, Tommi Uitto, was appointed in November 2018 after his predecessors, Samih Elhage and Marc Rouanne, both left the company.

“We are in the midst of another transition now, with the historic move to 5G,” Siilasmaa, 53, said in the statement. “While we know that Nokia is facing some short-term challenges as the technology matures, I am confident that we have the right actions underway to address those issues.”

Siilasmaa founded computer security company F-Secure Oyj and joined Nokia’s board in 2008, when Apple Inc.’s iPhone was starting to eat away at Nokia’s dominance in mobile handsets.

He pushed the company to beef up its network equipment activities, selling the ailing mobile phone business to Microsoft Corp. in 2013 and taking over temporarily as CEO before appointing Suri to succeed him permanently in 2014.

Baldauf, 64, was executive vice president and general manager of Nokia’s networks business from 1998 to 2005, and part of former Chairman Jorma Ollila’s “dream team” at a time when Nokia was, briefly, Europe’s biggest company.

Baldauf’s appointment is subject to her re-election to the board at a shareholder meeting planned on April 8, Nokia said.

©2019 Bloomberg L.P.

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