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Nokia's billion-dollar man

Una Galani 

Nokia: Is Stephen Elop the answer to Nokia's problems? Appointing the Microsoft executive to the helm of the world's largest maker of mobile handsets ended weeks of speculation about the future of Olli-Pekka Kallasvuo, his embattled predecessor. It also added a cool ¤1.3 billion ($1.6 billion) to Nokia's market value.

The decision to bring in the first non-Finnish chief executive in Nokia's 145-year history is evidence of the board's appetite to recover ground lost to competitors. Unlike Apple's Steve Jobs and Google's Eric Schmidt -- Nokia's main rivals in the high-end smart-phone market -- the Canadian is not a household name.

He spent the last two years as head of Microsoft's business division, which generated 33 per cent of the US computer giant's revenues in 2009. During his tenure, the unit's operating margins shrunk slightly. But as Nokia will be Elop's fourth employer in just five years, it is hard to assess his ability to create long-term value. Nonetheless, Elop's status as a foreigner with a software background is likely to herald a radical strategic overhaul for Nokia. Indeed, change will be unavoidable if he is to stand any chance of achieving his stated goal of delivering long-term profitable growth.

His first big decision concerns Nokia's soon-to-be-released Symbian 3 handsets. If they prove to be weak rivals to Apple's iPhone 4, Elop will need to decide whether to try and improve the existing smartphone operating system or abandon it. Any decision to adopt an alternative, like Google's Android, could take between 12 and 24 months to implement, according to Credit Suisse. Elop's arrival may not be the end of the management upheaval. Chairman Jorma Ollila, who turned Nokia from a sprawling conglomerate into a leading handset maker in the 1990s, has said he will remain in place to help the transition. Yet following the ousting of his close friend Kallasvuo, Ollila's earlier departure cannot be ruled out.

Elop has made a quick a start in recouping some of the tens of billions of dollars of market value that Nokia has lost in recent years. Any further progress is likely to be much slower.

First Published: Sat, September 11 2010. 00:30 IST
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