Nokia Needs Silicon Valley Thinking, Investors Say
Olli-Pekka Kallasvuo, chief executive officer of Nokia OYJ, during a news conference in New York. Photographer: Daniel Acker/Bloomberg
Nokia Oyj needs a new chief executive officer with Silicon Valley experience who can better position the world’s biggest maker of mobile phones against Apple Inc. and Research In Motion Ltd., investors said.
“The Apple brand promises fun, the BlackBerry brand stands for serious work, but what does Nokia stand for?,” said Ulf Moritzen, who helps manage 1 billion euros ($1.29 billion) at Hamburg-based Aramea Asset Management including Nokia shares. “Nokia needs someone who positions the company in an aggressive and clear way.”
Nokia has interviewed at least two U.S. candidates to replace Chief Executive Officer Olli-Pekka Kallasvuo, 57, and plans to make a decision by the end of the month, the Wall Street Journal reported. Arja Suominen, a spokeswoman for the Espoo, Finland-based company, declined to comment.
Nokia, which has yet to deliver a slim touchscreen that executes commands with a single tap, has cut forecasts twice in three months over delays in finishing the software for the N8, its new flagship handset. Nokia shares have lost two-thirds of their worth, wiping out 60 billion euros in market value, since the iPhone’s 2007 introduction.
Nokia climbed 2.2 percent to close at 6.915 euros as of 5:30 p.m. in Helsinki trading. The shares declined 22 percent this year, valuing the company at 25.9 billion euros.
Nokia may report July 22 that second-quarter net income slipped 24 percent to 287 million euros from 380 million euros a year earlier, according to the average estimate of 26 analysts surveyed by Bloomberg. Sales were probably little changed at 10 billion euros, 43 analysts said.
‘Missteps & Misses’
“Given all the missteps and misses, they need to do something to reassure people that they’re on track to deliver these phones when they’re supposed to,” said Jason Willey, a London-based equity analyst at Standard & Poor’s. “It’s a huge part of the visibility everyone will be looking for.”
Hiring a CEO who has built successful products or turned around a U.S. company could be the first step in making Nokia more competitive, shareholders said. Apple, Palm Inc., Google Inc. and Microsoft Corp. would be desirable companies from which to poach a new CEO, they said.
“It would be a very good step to have an outside CEO with very good software experience, who’s run a company before,” said Michiel Plakman, who helps manage 7 billion euros including Nokia shares at Rotterdam-based Robeco NV. “Investors are very, very negative and skeptical on the progress Nokia has been making.”
Board Reshuffled
Chairman Jorma Ollila and the Nokia board reshuffled executives under Kallasvuo in May but have left Kallasvuo in place as the company’s position deteriorated. Ollila said at the time that management had the board’s support.
“Best would be to poach someone from Apple, but that would cause really bad blood,” said Jacques Abramowicz, a Frankfurt- based analyst at Silvia Quandt & Cie AG, with a “neutral” rating on Nokia. “They might actually call in a manager from Palm, because they had an excellent user interface.”
Hewlett-Packard Corp. agreed to acquire Palm for $1.2 billion on April 29, following months of market speculation Nokia might buy the maker of the Pre and Pixi handsets. Palm Chief Executive Officer Jon Rubinstein earlier led development of the original iPod at Apple.
N8 Delayed
Nokia still hasn’t announced a release date for the N8 or its successors. The company needs to get new high-end smartphones into stores to recoup some of the profits it’s lost by not having a competitor to Apple’s iPhone or handsets running Google’s Android, analysts said.
The average selling price for Nokia devices may have declined to 59 euros in the second quarter from 62 euros a year earlier, according to 20 analyst estimates compiled by Bloomberg. The company may have shipped 112 million handsets for a market share of 34 percent, the analysts said.
“There aren’t many CEO candidates out there who know how to lead a company as big as Nokia,” said Carolina Milanesi, a research director with Gartner Inc. in Egham, U.K. “There’s no question that investors want a change and a significant one this time. But finding the right person is not going to be easy.”
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
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