The appointment late on Wednesday of Colaninno, a close ally of former chairman Carlo De Benedetti, punctuates two weeks of crisis at the information technology group that have seen its finances come under stock market scrutiny and its share plunge to record lows.
Traders warned the sharp rise in the share price on Thursday was more a reflection of short term speculation on the volatile stock than a vote of confidence in the new chief executive.
There's no point in rushing to buy now. The situation still isn't clear and the new man is considered a De Benedetti clone, said a broker in Milan. We have no new information to suggest it's a turnaround situation just yet and the way the stock has been moving recently, it's more like going to a casino.
The share fell to a record low at the start of the week and has repeatedly hit automatic suspension tripwires since. The shares closed higher Wednesday ahead of the emergency board meeting in which the chief executive of three months, Francesco Caio, was ousted to be replaced by Colaninno, head of auto components group Sogefi.
Colaninno's appointment is the latest twist in events since De Benedetti himself resigned from the Olivetti board on September 3 after 18 years as group chairman, apparently losing a power battle with Caio.
But De Benedetti, who remains Olivetti's largest shareholder with a 15 per cent stake, is reported to have been the prime mover behind the ousting of Caio, his former assistant who masterminded the launch last year of Olivetti's 41.3 per cent owned Omnitel mobile phone venture.
Analysts speculate Colaninno may be a stop-gap figure who will run Olivetti while it hunts for a prominent figure in the telecommunications industry to push it forward in the phone sector, widely viewed as its best hope for future survival.
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Colaninno is widely seen as enjoying the confidence of De Benedetti, and the former chairman's industrial holding company CIR also controls Sogefi, founded by Colaninno in 1981.
But analysts and traders are wary about hailing Caio's departure and Colaninno's arrival as a turnaround, warning problems highlighted in the last two weeks have not gone away.
The company side-stepped key questions about its business put by market regulators by issuing a statement early on Wednesday giving details of some of its affairs but leaving out others.
Caio, the current chairman Antonio Tesone and De Benedetti are being investigated by magistrates in Olivetti's home town of Ivrea in north west Italy who suspect the company may have issued misleading statements about its financial position, judicial sources say.