Nokia CEO Rajeev Suri departs in August

Seated left to right are Sari Baldauf, Nokia Board Vice Chair and Chair nominee; Pekka Lundmark; Nokia CEO Rajeev Suri; Nokia Board Chair Risto Siilasmaa. (Screenshot of press conference)

Nokia’s CEO and President Rajeev Suri will leave the company in August to be replaced by Pekka Lundmark, who will start in his new role on September 1, 2020.

Lundmark is currently president and CEO of Fortum, an energy company based in Espoo, Finland, the same city where Nokia is headquartered. Prior to Fortum, Lundmark was president and CEO of Konecranes, a global material-handling company. And from 1990-2000 he held multiple executive positions at Nokia, including VP of strategy and business development. 

Pekka Lundmark
Pekka Lundmark

Suri has been with Nokia for 25 years, and has served as president and CEO for more than 10 years. He oversaw Nokia’s acquisition of Alcatel-Lucent in 2016, and has been on a cost-cutting, synergy-realizing mission ever since. Unfortunately for Nokia, the company’s shareholder value has not impressed investors in recent years. And Nokia appears to have fallen behind in the race to 5G. 

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In its third quarter 2019 earnings call in October, Suri acknowledged that Nokia’s 5G profit margins were dampened by the high cost of its ReefShark chipset, and the company is quickly pivoting to new SoC-based products.

RELATED: Nokia made a bad call for 5G chips, scrambles to rectify situation

Nokia’s stock was down nearly 30% in 2019, and the company has suspended its dividend for the time being.

In a press conference today, Nokia’s Board Chair Risto Siilasmaa said the CEO succession process had been underway “for quite some time” and was “not related to any recent events.” However, Siilasmaa’s prepared statement touched on a few things that Suri has been criticized for lately, including lack of a clear 5G strategy and the company’s stock value.

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” said Siilasmaa in the statement. “He has a record of leadership and shareholder value creation at large business-to-business companies; deep experience in telecommunications networks, industrial digitization, and key markets such as the United States and China; and a focus on strategic clarity, operational excellence and strong financial performance.”

Rumors surfaced last week that Nokia was exploring strategic options and working with advisers to consider potential asset sales or some kind of merger.

RELATED: Nokia mum on rumors of asset sales, merger talks

Siilasmaa was adamant today that those rumors aren’t true. “We are not evaluating such strategic options at the moment,” he said. “The new CEO will do his normal review, and then may propose changes to the board. But at the moment we have no such actions on the way.”

Suri said under his tenure Nokia has become the world’s No 2 player in telecommunications infrastructure rising from No. 4 after the acquisition of Alcatel-Lucent. In addition to bringing in Alcatel-Lucent’s optical/IP transport and fixed broadband expertise, Suri also extended the company’s portfolio into enterprise and software, and he helped grow Nokia’s patent licensing activities into a sustainable business.

Suri will stay on through August 31 to help ensure a smooth transition. And he will continue to serve as an advisor to the Nokia board of directors until January 1, 2021. 

The Dell’Oro Group just wrapped up its 2019 reporting period for telecommunications infrastructure programs, finding that the overall telecom equipment market — broadband access, microwave and optical transport, mobile core and radio access network, and service provider router and switch — advanced 2% during 2019, recording a second consecutive year of growth.

Dell’Oro reported the following for full-year 2019 telecom equipment revenue shares relative to 2018 revenue shares — the latter indicated in parenthesis: Huawei 28% (28%); Nokia 16% (17%); Ericsson 14% (14%); ZTE 10% (8%); and Cisco 7% (8%).

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