Nokia: Nokia could do with a management shake-up. The world's largest handset maker has fallen behind high-end rivals Apple and Google and its failure to manage expectations – with two profit warnings in as many months – is testing investor patience. It makes sense that the board is looking to oust chief executive Olli-Pekka Kallasvuo, as reported by the Wall Street Journal.
Kallasvuo, at the helm since 2006 and with the firm for three decades, may not be the man to transform the company from a dominant hardware maker to an all-encompassing provider of services and applications. Although Nokia still has a 41 percent market share, it has struggled to become a leader in the smartphone age.
Instead of leading, Nokia is lagging. It took a year to catch up with Apple first touch-screen mobile device in 2007. Now Nokia has reported delays in the technology for the new Symbian 3 smartphones, while Apple has raced ahead with the release of the iPhone 4.
The failure to keep up with the latest innovations has become characteristic of the mobile firm. Nokia splurged $8.2 billion on map-maker Navteq 2007, only to be forced earlier this year to offer free navigation on all its smartphones — to compete with Google.
Kallasvuo, who was also once head of the mobile business, has failed to keep Nokia from repeating past mistakes. The profit warnings are reminiscent of 2004 and 2005, when the firm was a laggard in the development of clamshell phones. Jorma Ollila, who is now chairman, led the company at the time.
Under Kallasvuo, Nokia has delivered a minus 55 per cent total return to shareholders, including a 25 per cent drop in the share since the start of the year. While Kallasvuo has struggled, the total return at Blackberry maker Research in Motion was 136 per cent.
Nokia's board has reportedly met with at least two U.S. based executives. The appointment of a non-Finnish chief executive would be the first in Nokia’s 145-year history. While it will be difficult for any chief executive to change Nokia's culture overnight, a fresh perspective from an innovator and outsider could start by winning back investor confidence.
