Global Biz

Nokia replaces CEO with Microsoft exec

(Agencies)
Updated: 2010-09-10 17:07

HELSINKI - Nokia Corp. will replace CEO Olli-Pekka Kallasvuo with Stephen Elop from Microsoft on September 21, the world's largest handset maker said Friday, as it struggles to keep pace with smaller and more innovative rivals, particularly in the smartphone market.

Stephen Elop, named as Nokia's new Chief Executive, poses in this undated handout. [Agencies]

With Nokia stock down more than 20 percent this year due to two profit warnings, Kallasvuo had come under increasing pressure amid speculation he would be ousted.

Investors welcomed the news, and sent the company's share price up 6.5 percent to euro8.25 ($10.49) as the Helsinki Stock Exchange opened.

"The time is right to accelerate the company's renewal - to bring in new executive leadership with different skills and strengths in order to drive company success," chairman of the board and former CEO Jorma Ollila said in a statement.

Kallasvuo will leave as president and CEO on September 20 and give up his seat on the board of directors with immediate effect and be replaced by Elop, who heads Microsoft's business division.

Kallasvuo will continue to chair the board of the Nokia Siemens Networks unit in a non-executive capacity, the company said.

Although it is still the world leader in handset sales - with a 33 percent market share - Nokia has been slow at detecting new trends, like folding clamshell models and touch screen handsets.

Markets have been expecting something fresh and new from the company that once had the innovative edge in the industry but that has not happened since Kallasvuo took over in 2006. He has also been unable to tackle problems in the North American market, the company's worst performer, despite a pledge to make it a top priority.

Nokia has predicted that while global mobile market will grow 10 percent this year its own growth will remain flat and its ailing network sector, Nokia Siemens Networks - a joint venture between Nokia Corp. and Siemens AG of Germany - continues to see revenue fall.

Kallasvuo's departure was hinted at as early as July. When announcing the company's second-quarter earnings report, he conceded that rumors that he might be replaced were "not good for Nokia, and in one way or other we should be able to solve the problem to end the speculation."

Nokia, based in Espoo near Helsinki, employs 130,000 people worldwide.