Nokia's Ollila backs successor Kallasvuo despite tax fraud conviction

Mobile phone giant reports Q4 results

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Jorma Ollila, the Chairman and CEO of Nokia Corporation, expressed his support to the company’s President and COO Olli-Pekka Kallasvuo on Friday in the wake of revelations that Kallasvuo had been fined for minor tax fraud in 2004.
      Kallasvuo, who is to succeed Ollila in June this year, had failed to make a customs declaration on goods that he had brought into Finland from a trip to Switzerland. Finnish customs had been alerted by Swiss officials after Kallasvuo had claimed a VAT rebate worth EUR 650 when leaving the country on goods worth about EUR 11,000. He was fined more than EUR 30,000.
      Ollila made his comments at a press conference announcing Nokia’s results for the fourth quarter of 2005.
      Ollila said that Kallasvuo had informed Nokia about the incident, adding that he did not feel that Nokia had any need to inform the public.
      "What is done cannot be undone. He completely understands the seriousness of his error, and has apologised to Nokia. Nokia has accepted his apology, and he enjoys the 100 percent support of the company’s board", Ollila said.
     
Ollila will leave the operative management of Nokia in June, and will hold the post of the part-time chairman of the Nokia board.
      The revelation of the tax evasion incident last week has been an embarrassment to Nokia, which has emphasised high ethical standards under Ollila’s leadership.
      When asked what the implications of the case might be for Nokia’s reputation, Ollila answered: "Time will tell. Future actions will decide."
     
Thursday was the last time that Ollila presented the company’s annual result in his present capacity as CEO.
      The figures showed that sales in the last quarter of 2005 were nine percent higher than in Q4 2004. However, in spite of the growth in sales, tough competition meant that fourth quarter profits were six percent lower than at the same time of 2004.
      The average price of Nokia handsets went down to EUR 99 in the last three months of 2005. In July-September, the average price was still EUR 102.
      The trend for lower prices caused concern among investors: Nokia’s share price went down by nearly two percent on the Helsinki Stock Exchange on Thursday. Nokia subcontractors also suffered in the day’s trading.
     
Nokia’s share of the global mobile telephone market appears to be growing, thanks to competitive pricing, marketing efforts, and improved products.
      Nokia accounted for 34 percent of the mobile phones sold during the Christmas shopping season, up from 33 percent in Q3.
      In previous years, Nokia’s market share has risen before Christmas only to fall in subsequent months. The company now predicts that its market share will stay at the current level, or increase during the present quarter.
      Nokia’s long-term goal is to gain a 40 percent market share. In the spring of 2004 the market share plummeted from 38 percent to the present level, and has fluctuated ever since.
      Ollila was not concerned about the fall in handset prices. At the press conference, he said that Nokia does not have any targets for sales prices: the market share was seen to be a much more important goal.


Previously in HS International Edition:
  Nokia gets five-year service contract from India (26.1.2006)
  Nokia executive Olli-Pekka Kallasvuo pays massive fine for minor tax fraud (23.1.2006)

Helsingin Sanomat