Looks like things may need to get worse at Nokia (NYSE: NOK) before they start to get better: Nokia’s CEO Stephen Elop (pictured) is apparently planning to sack nearly half of the handset maker’s executive board as the company looks to radically shake up its business in face of falling market share and struggles in the high-end smartphone segment.
The report comes less than a week before the company is due to lay out a turnaround plan to investors and analysts in a Capital Markets Day presentation in London. The rumours first appeared in the Germany business weekly, WirtschaftsWoche (WiWo). Later the WSJ reported the same news, citing a person familiar with the situation.
Nokia has a lot to tackle in the weeks and months ahead: In Nokia’s last quarterly earnings, reported at the end of January, net profit for the quarter was down to €743 million ($1 billion) compared to €882 million ($1.2 billion) for the same quarter a year earlier, a drop of nearly 16 percent. And whil Q4 overall industry mobile device volumes were up 12 percent to 402 million units year-on-year, Nokia estimates its own device market share went down 4 percent to 31 percent.
In the smartphone segment, Nokia’s Symbian OS is perceived to be outdated and unable to keep up with the likes of Google’s Android and Apple’s iOS. Observers have long been speculating that instead of trying to revive Symbian — or move to another Nokia-developed platform like MeeGo — that Nokia will instead link up with a third-party software player, such as Microsoft (NSDQ: MSFT) or even Android, to jump back into the smartphone game. But even third-party alliances have their own huge challenges.
WiWo named four executives — all from the old-guard and associated with former CEOs Olli-Pekka Kallasvuo and Jorma Ollila; and all heading up areas where Nokia has been perceived to be particularly weak — who are expected to leave the company:
— Mary T. McDowell, EVP mobile phones (joined Nokia in 2004);
— Tero Ojanperä, EVP of services and mobile solutions (joined Nokia in 1990);
— Niklas Savander, EVP of markets (joined Nokia in 1997);
— Kai Öistämö, EVP and chief development officer, overseeing such areas as developer initiatives and corporate strategy and alliances (joined Nokia in 1991).
WiWo says that Nokia has retained headhunters to find executives with international experience and with “software expertise.”
The WSJ however notes that Elop’s strategy and overall changes are not yet finalized, and that executives themselves won’t even know of their fate until they get briefed the day before the strategy day on the 11th.
A work in progress, and a lot of work ahead, for Nokia.