In a span of four years since Kallasvuo took over as CEO of Nokia, the company remains the overall mobile phone dominant market leader. But of late, the leading handset manufacturer finds its position growingly threatened by competitive trends. Clearly, a major transformation is in order, and the sooner the better. by Virat Bahri
Olli-Pekka Kallasvuo declared in a recent shareholder meeting that 2010 was a key year for all of us. Incidentally, the statement now holds special relevance for Kallasvuo himself, amidst rumours that the Nokia board is on the look out for a successor. Shareholders have been pressing for a change for long, so Kallasvuo is headed for the history books alright. His most daunting challenge is to ensure that it is for the right reasons.
When Kallasvuo took the reins as CEO in 2006, it was a different world, where Nokia was undisputedly the number one mobile handset manufacturer — a brand that was as clean, unblemished and formidable as could be; with an array of products that were unparalleled. In fact, players like Motorola and Samsung had their moments of success, but the leader was largely successful in keeping competition at bay and staying in the good books of investors. Kallasvuo soon initiated a landmark transformation at Nokia through the much-touted diversification into internet-based services.
For the record, Nokia remains number one in the handsets business, with a market share of 35% for the first quarter of 2010 (), albeit a decline of 1.2% over the previous year. Yet, there is a marked dampening of market sentiment in just a span of four years. Nokia’s shares closed at $22.06 on June 1, when Kallasvuo became the CEO and they were last trading at just $8.82 on July 19. Market capitalisation at $32.54 billion on this date is apalling for a company that saw m-cap levels hovering at $250 billion levels around a decade ago.
The devil is in the fine print, as they say. To put it more specifically, Nokia should have to make every buck work much harder to retain its leadership position today compared to 2006. The leading handset manufacturer has suffered a significant squeeze on its financials in 2009, with net sales at €41 billion (down by 19.2% yoy) and operating profit at €1.2 billion (down by 75.9% yoy). The first quarter of 2010 was better, due to the base effect of 2009, with net sales at €9.5 billion (growth of 2.6% yoy and operating profit at €488 million (up by 787% yoy).
Olli-Pekka Kallasvuo declared in a recent shareholder meeting that 2010 was a key year for all of us. Incidentally, the statement now holds special relevance for Kallasvuo himself, amidst rumours that the Nokia board is on the look out for a successor. Shareholders have been pressing for a change for long, so Kallasvuo is headed for the history books alright. His most daunting challenge is to ensure that it is for the right reasons.
When Kallasvuo took the reins as CEO in 2006, it was a different world, where Nokia was undisputedly the number one mobile handset manufacturer — a brand that was as clean, unblemished and formidable as could be; with an array of products that were unparalleled. In fact, players like Motorola and Samsung had their moments of success, but the leader was largely successful in keeping competition at bay and staying in the good books of investors. Kallasvuo soon initiated a landmark transformation at Nokia through the much-touted diversification into internet-based services.
For the record, Nokia remains number one in the handsets business, with a market share of 35% for the first quarter of 2010 (), albeit a decline of 1.2% over the previous year. Yet, there is a marked dampening of market sentiment in just a span of four years. Nokia’s shares closed at $22.06 on June 1, when Kallasvuo became the CEO and they were last trading at just $8.82 on July 19. Market capitalisation at $32.54 billion on this date is apalling for a company that saw m-cap levels hovering at $250 billion levels around a decade ago.
The devil is in the fine print, as they say. To put it more specifically, Nokia should have to make every buck work much harder to retain its leadership position today compared to 2006. The leading handset manufacturer has suffered a significant squeeze on its financials in 2009, with net sales at €41 billion (down by 19.2% yoy) and operating profit at €1.2 billion (down by 75.9% yoy). The first quarter of 2010 was better, due to the base effect of 2009, with net sales at €9.5 billion (growth of 2.6% yoy and operating profit at €488 million (up by 787% yoy).
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
