Nokia rings changes in major board reshuffle

Nokia, the Finnish mobile phone maker, announced its biggest management reshuffle in five years as the company moved to tackle flagging sales.

The management appointments, which put non-Finns on the board for the first time, were seen as a step towards grooming a possible successor to its chief executive, Jorma Ollila, who oversaw Nokia's ascent to the top of the mobile handset industry and is under contract until the summer of 2006.

The world's biggest handset manufacturer also said it would reorganise its divisional structure. Alongside the core mobile phones and network divisions, the existing third unit, Nokia Ventures, will go and be replaced by Multimedia and Enterprise Solutions businesses.

Mr Ollila said: "The industry and corporate structures that were established a decade ago at the dawn of mobile communications were very different from what is needed going ahead."

Nokia named Rick Simonson, an American former banker, as its new chief financial officer, replacing Olli-Pekka Kallasvuo, who will head the Mobile Phones division. Mr Simonson, 45, was a US-based telecoms banker with Barclays Capital and Bank of America Securities before he joined Nokia as head of customer finance in 2001. Hallstein Moerk, a Norwegian, was also promoted to the board, in charge of human resources.

While the old system put all responsibility for handsets in Nokia's Mobile Phones unit, the new structure would spread it across the Mobile Phones, Multimedia and Enterprise units. Entry-level phones would come under Mobile Phones, while camera-equipped phones like the 3650 model would belong to Multimedia and the company's communicator model, a combination phone and personal computer, would sit with Enterprise Solutions.

Matti Riikonen, analyst at Evli Bank, said: "Nokia is in a difficult phase where it has to meet investor expectations about future growth."

Current Nokia Mobile Phones head Matti Alahuhta, who along with Mr Kallasvuo and Mr Ollila has been one of the firm's core cadre of Finnish managers, would become an executive vice president and chief strategy officer.

Anssi Vanjoki, 47, who was an executive vice president at the previous Nokia Mobile Phones unit, will now lead the Multimedia division.

While some analysts focused on Mr Kallasvuo's move to Mobile Phones as possibly grooming him to be Mr Ollila's eventual replacement, other appointments also drew attention.

"I'm not sure it is a promotion that puts him (Mr Kallasvuo) in the pole position," one analyst said. "When Ollila leaves, many investors would like to see a younger person there, like Vanjoki."