Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Is Nokia About to Be Smashed Into Little Pieces?

Is Nokia About to Be Smashed Into Little Pieces?

In Finland’s epic national poem, the Kalevala, a hero is tasked with retrieving the mythical sampo, a mill capable of producing salt, meal and gold that is a talisman of happiness and prosperity.
It’s a task that now befalls Pekka Lundmark, the executive appointed chief of Nokia Oyj on Monday with a mandate to return the troubled Finnish network-equipment maker to more prosperous times.

The time is right for his predecessor Rajeev Suri to hand over the reins. Appointed head of Nokia’s networks division in 2009, Suri became CEO in 2014 as that business became the firm’s main operation after the sale of the handset arm to Microsoft Corp. He has overseen the reshaping of a company that at the dawn of the millennium was one of the world’s biggest, with a market capitalization peaking at $290 billion in 2000, and the pride of Finnish industry.

By acquiring French rival Alcatel-Lucent in 2016, he ensured that Nokia remained one of the top three suppliers of telecoms equipment, even as China’s Huawei Technologies Co. spent aggressively to leapfrog it and Sweden’s Ericsson AB to become the biggest player.

But that takeover also caused problems for which Suri now seems to be paying the price. Nokia’s revenue grew more slowly than either of its two biggest competitors last year. Difficulties integrating the French company proved a distraction as the telecommunications industry started developing fifth-generation network technology. Carriers complain that Nokia now lags Ericsson and Huawei technologically, and the Finnish firm has struggled to compete on cost. Suri will hand over the reins in September.

Chairman Risto Siilasmaa said Nokia aims to resolve shortcomings in the semiconductors used in its base stations this year, which ought remedy some of the tech concerns. Siilasmaa already planned to step down, to be replaced in April by Sari Baldauf.

All of those missteps had helped drive shares of Nokia in its current form close to their all-time lows as a multiple of expected earnings. The stock was trading at less than 14 times forward earnings before the management change was announced. It traded as high as 29 times earnings on that basis in Suri’s first year at the helm.

That downward trajectory makes Nokia vulnerable to an approach from an activist investor who could seek a breakup of the company. Replacing the CEO might help the company get ahead of the problem. And it surely can’t be a coincidence that Lundmark’s appointment follows that of Baldauf as chair of Nokia’s board: While in the same role at Fortum Oyj, she appointed Lundmark to his current job as CEO of the Finnish utility. Under his leadership, the firm has outperformed its European peers, generating an 80% return for shareholders.

One recent event will give Lundmark some breathing space: U.S. regulators’ decision to approve the acquisition of Sprint Corp. by rival carrier T-Mobile US Inc. The delayed deal, which was first agreed two years ago, has meant that some spending decisions have also been pushed back. Both companies are big Nokia customers, which might help earnings this year.

But Lundmark might also learn from the Kalevala. In the poem, the quest results in a fight that sees the sampo smashed into little pieces. Lundmark has been made responsible for determining Nokia’s strategy, which will include deciding whether Suri’s approach to offering an “end-to-end” network solution still makes sense, or whether some businesses are worth divesting. If he dithers, then activists might take the decision out of his hands and lead Nokia to a sampo-like fate.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Japanese Customer Sways from VW to BYD after “Unbelievable” Test Drive amid Dealership Expansion
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Pickles are the latest craze among Generation Z in the United States.
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
×