Nokia names Olli-Pekka Kallasvuo as new CEO, to succeed Jorma Ollila in 2006

Monday, August 1st 2005, 9:57 am
By: News On 6

HELSINKI, Finland (AP) _ Nokia Corp., the world's biggest mobile phone maker, named a successor Monday to its longtime Chief Executive Jorma Ollila, who is stepping down from the post next June.

Olli-Pekka Kallasvuo, 52, who heads the Mobile Phones business unit, will replace Ollila as chief executive on June 1, 2006, Nokia said. He will also take over as president and chief operating officer in October of this year.

Nokia said Ollila, 54, who has been chief executive for 13 years and chairman for six, will remain as non-executive chairman after Kallasvuo takes the helm. It said this would provide ``an orderly transition while giving the company access to his understanding of our business.''

Ollila said he'd originally planned to phase himself out as early as 2001, but decided to continue for five more years after the board requested it.

He had previously suggested in media interviews that he expected to be replaced as chief executive in 2006, but the company had not set a date for the change. Speaking Monday at Nokia headquarters, he said the decision to leave was personal.

While some analysts have said choosing a new chief executive from inside the company would signal stagnation, Ollila defended the decision, saying ``companies who have been able to groom CEOs internally have done significantly better.''

``We came to the conclusion that the quality of several of the reviewed internal candidates was so high that it did not merit to go outside,'' he said.

Nokia Vice Chairman Paul Collins said the company's board ``has had in place a succession process in anticipation of Jorma Ollila's retirement with the objective of maintaining vitality, adapting to a rapidly evolving industry, and ensuring continuity.''

The Finnish company also said its current president, Pekka Ala-Pietila, will resign for personal reasons and will leave the company in February.

Shares in Nokia fell 0.9 percent to 13.05 euros ($15.82) on the Helsinki exchange after the announcement.

Copenhagen-based telecom analyst John Strand said Ollila's decision to step down came as no surprise, and neither did the decision to replace him with someone from within the company.

Kallasvuo is ``an operational guy. He knows how the organization is put together,'' Strand said.

Poul Jessen of Danske Securities told Dow Jones Newswires that the mobile phone division has improved under Kallasvuo. However, he called Kallasvuo ``not successful'' when heading U.S. operations in 1997-1998.

``The U.S. has been Nokia's weak spot for some time,'' Jessen said.

Nokia had an estimated first-quarter market share of 30.4 percent of the world's mobile phone market, Gartner Dataquest said in May.

But the company has been under increasing pressure from its chief rival Motorola Inc., which has a market share of 16.8 percent. Motorola recently said it had picked up market share and that its new phones would be directly targeted at Nokia's core product line.

Nokia, based in Espoo just outside the Finnish capital, has sales in 130 countries and about 55,500 employees.