Nokia – a heavy burden for new chairman

News of appointment of Siilasmaa helps boost share price

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Shares of mobile phone manufacturer Nokia rose in value by seven per cent on the Helsinki Stock Exchange on Thursday. This was partly attributed to news of the pending appointment of Risto Siilasmaa as the new chairman of the company’s board.
      Another reason is that Compal, one of the company’s subcontractors, reported strong growth in its turnover. Compal subcontracts for Nokia in the manufacture of the new Lumia model, which uses Microsoft Windows as its operating system.
      A third reason for the increase was a forecast by Credit Suisse according to which sales of the Windows phones would revive Nokia’s results this year.
     
In spite of Thursday’s glimmer of light, Siilasmaa faces a daunting task.
      In the past three years Nokia’s profitability has plummeted, and it has lost much of its former allure. While Nokia used to be a trailblazer, now it largely follows in the footsteps of others.
     
In spite of numerous attempts, Nokia has not managed to convince investors or consumers that it has made a comeback as a leading manufacturer of smartphones.
      Expensive smartphone models are of crucial importance for Nokia’s profitability. The phones give a considerably better profit margin than cheaper basic models.
      As Chairman of the Board, Siilasmaa should constantly weigh and question the strategic decisions of the operative management to make sure that they are enhancing demand for the products and services.
     
One of the biggest questions is what the smartphone of the future will be like – that is, after the days of the rectangular phones with one touch screen are over.
      This is not a question that the CEO and the Chairman of the Board can resolve on their own.
      They need to choose the most promising from among numerous product development projects, and to provide sufficient funds for their development.
     
Nokia still has a fair amount of know-how, even though much has left the company. In addition to the actual telephones, the importance of services and applications is growing constantly. Increasing numbers of consumers use their phones for much more than making phone calls or writing text messages.
      Nokia is one of the few companies that can challenge Google’s success in wireless services.


Previously in HS International Edition:
  Nokia CEO Elop: Use of Windows platform will strengthen Nokia (17.2.2011)
  Nokia Board is expected to propose Risto Siilasmaa as its next Chairman (5.1.2012)
  Knock, Knock, Nokia´s Heavy Fall... (5.10.2010)
  Nokia to support new companies to employ superfluous R&D staff (23.3.2011)

Links:
  Risto Siilasmaa (Wikipedia)
  Nokia

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