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
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
Record-Low Danube Forces Nuclear Cuts and Emergency Power Curbs
Danube Drought Forces Hungary’s Paks Nuclear Plant Into Full Shutdown
Ceuta Death Toll Rises as Spain and Europe Clash Over Border Response
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
The AI Race Enters Its Infrastructure Era
Britain Nationalises British Steel to Protect Scunthorpe Production and Strategic Supply
French National Assembly Overrides Senate to Pass Historic Assisted-Dying Legislation
×