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Nokia, which closed the sale of its phone business to Microsoft on Friday, will on Tuesday name Rajeev Suri as its next CEO and outline its new strategy with a focus on its networks equipment business, a newspaper said.
Citing unnamed sources, daily Helsingin Sanomat on Friday said Nokia would also on Tuesday, along with its first-quarter results, announce how much cash it would pay out to shareholders.
Investors have been looking forward to hearing about Nokia’s next steps since it announced the euro 5.44-billion ($7.5-billion) Microsoft deal in September.
Forty-six-year-old Suri, born in India, has been widely considered the leading candidate for the CEO post as in recent years he has helped the network division Nokia Solutions and Networks (NSN) turn profitable with a drastic restructuring plan and by ditching unprofitable businesses.
The newspaper also said Nokia would over time abandon the name NSN.
Microsoft, meanwhile, completed the takeover of Nokia's phone business, ending a seven-month wait to renew its assault on the mobile market and leaving the Finnish company seeking growth in wireless networks.
The final price may be "slightly higher" than the euro 5.44 billion ($7.5 billion) announced in September, Nokia said on Friday. About 30,000 employees are transferring to Redmond, Washington-based Microsoft as part of the transaction, which was delayed amid regulatory scrutiny.
Microsoft, the world's largest software maker, is gaining a device business that it'll rely on to catch up with Apple Inc and Google Inc in the tablet and mobile-phone markets.
"The deal alone doesn't immediately solve the problem for either company," said Sami Sarkamies, an analyst at Nordea Bank AB in Helsinki. "Now, they have to roll up their sleeves and starting working to play catch-up."
| MEET NOKIA’S UPCOMING CEO |
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DESIGNATION: Chief executive officer of Nokia Solutions and Networks (NSN)
- Previously head of services, NSN, September 2007 – September 2009
- Joined Nokia in 1995, and has held numerous executive level positions in the company
EDUCATION: Bachelor of engineering in electronics and telecommunications, Manipal Institute of Technology, Mangalore University, Karnataka
The purchase of the unprofitable division makes Microsoft the world's second-largest maker of mobile phones with about 14 per cent of the market, according to researcher IDC. Samsung Electronics Co is the market leader.
In smartphones, the most profitable part of the industry, Microsoft will continue to lag far behind rivals. Apple and devices running Google's Android operating system accounted for about 96 per cent of the 290 million smartphones shipped in the fourth quarter, according to IDC. Devices using Microsoft's Windows Phone software had three per cent of the market.
Nokia’s future
Nokia, once the smartphone market leader, is evaluating its strategy for its future without the phone business. The Espoo, Finland-based company said in March it aims to be able to discuss the outcome of the review at the end of April.
James Etheridge, a spokesman for Nokia, declined to comment on the Helsingin Sanomat report. The new CEO will replace Stephen Elop, who is returning to Microsoft as executive vice-president of the devices group. He joined Nokia in 2010 and stepped down as CEO when the sale to Microsoft was announced.
Shares of Nokia have advanced about 80 per cent since the companies disclosed the deal, and rose 1.7 per cent to euro 5.37 at 3:11 pm in Helsinki. Microsoft has added 19 per cent.
Cash allocation?
Nokia, which is receiving the Microsoft deal proceeds in cash, said in January it plans to decide on a payout to shareholders after the sale is completed. The company's debt is ranked junk by the three main rating companies.
The proceeds will also help Nokia invest more in research and development and potentially acquisitions, Nordea's Sarkamies said. After the sale, Nokia will get about 90 per cent of its revenue from base stations, antennas and other network equipment as well as related services it sells to wireless carriers. Competitors include Sweden's Ericsson, China's Huawei Technologies Co and France's Alcatel-Lucent SA.
Nokia is seeking partnerships similar to a pact it has with Juniper Networks Inc to expand its networks business, Suri said in an interview in February. Last year, Nokia considered buying the wireless-equipment unit of Alcatel-Lucent, people familiar with the matter have said.
In addition to network gear, Nokia has a digital-maps business and a unit that licenses its patents.
Nadella's effort
Microsoft unveiled this month an updated version of its Windows Phone software with voice-search features, and said it's offering the platform for free for small phones and tablets as part of CEO Satya Nadella's turnaround.
Nadella, who was named CEO on February 4, is working to remake Microsoft for an era where smartphones and tablets have become central. To do so, he must strike a balance between offering Microsoft's software for competing platforms while still keeping the company's Windows operating system as a core focus.
Windows stands to be the fastest-growing smartphone operating system over the next four years with 30 per cent annual growth, according to IDC. Even at that rate, Windows Phone would only make up seven per cent of the total market in 2018.
Microsoft's new handset division will begin selling phones using Windows Phone 8.1, Elop said this month. A high-end device called 930 will debut in June and feature wireless charging, while two cheaper phones designed for emerging markets will become available in May, Elop said.
