Nokia Seeks New Leadership Amid Stagnating Sales and Falling Share Price

Nokia, one of the world’s largest telecom equipment manufacturers, is reportedly searching for a new Chief Executive as it faces stagnant sales and a struggling share price. The Finnish company has approached potential candidates to replace Pekka Lundmark, who has served as CEO since 2020. The search is still ongoing, with at least one headhunter appointed to oversee the process.

Nokia was once a symbol of European technological success, leading the global mobile phone market throughout the 1990s and 2000s. However, after selling its mobile phone business to Microsoft in 2013, the company has faced challenges in its transition to a focus on network equipment for the telecommunications industry.

The decision to seek a new Chief Executive comes after Lundmark stabilized the company in the wake of being outpaced by competitors such as China’s Huawei and Sweden’s Ericsson during the early stages of the 5G network rollout. During his tenure, he implemented cost-cutting measures and restructured the business, yet investors have grown frustrated with his inability to drive revenue growth. Sales have remained below the levels reached in 2016, following the €15.6 billion acquisition of Alcatel-Lucent, despite Huawei’s exclusion from certain Western markets due to security concerns.

One shareholder expressed dissatisfaction, stating that Lundmark had not effectively addressed Nokia’s growth challenges, noting that the company’s revenue has not increased since the acquisition of Alcatel-Lucent.

In addition to searching for a new CEO, Nokia is also looking for a new chair, as Sari Baldauf, a close associate of Lundmark, is set to turn 70 next year. Sources have indicated that the new chair is unlikely to be selected from the current board, with external candidates already being approached.

In response to these developments, Nokia issued a statement asserting that its board fully supports President and CEO Pekka Lundmark and that there is no ongoing process to replace him. The statement emphasized that it is a fundamental duty of every board to systematically and continuously evaluate and discuss the long-term succession plan for its leadership team, considering both internal and external candidates. The statement further clarified that the same process applies to the chair and board of directors, with the assistance of professional advisors, and that the current CEO and chair are fully aware of and involved in this process.

Nokia has faced difficulties adapting to the slowdown in spending by telecom operators following an initial surge from the adoption of 5G networks. In an effort to reduce costs, Lundmark announced up to 14,000 job cuts — about 16 percent of the workforce — last October. Shortly after, in December, rival Ericsson secured a significant contract with U.S. telecom company AT&T, potentially worth up to $14 billion.

In July, Nokia reported an 18% decline in sales and a 32 percent drop in operating profit for the second quarter compared to the same period the previous year. Lundmark acknowledged at the time that the company’s financial performance was being adversely affected by continued market weakness but expressed optimism that Nokia would see a “significant acceleration” in sales growth in the latter half of the year.

Lundmark, a veteran of Nokia, began his career with the company in 1990 as an account manager during its ascent as the world’s largest mobile phone manufacturer. He left Nokia in 2000, at a time when its market capitalization was near its peak of around €300 billion. He subsequently spent nearly two decades as CEO of Finnish companies like Fortum and Konecranes before returning to Nokia in August 2020.

Since Lundmark’s return as CEO, Nokia’s share price has declined by 7 percent, giving the company a market capitalization of approximately $23.5 billion as of Thursday.

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