Nokia has appointed a new president and CEO and unveiled a new strategic programme. The company wants to become a leader in technologies important in a connected world by building on its three businesses in networks, location and technologies. The company also has plans a EUR 5 billion programme to optimise its capital structure and a new governance structure and leadership team.
New CEO Rajeev Suri will take office from 1 May, after joining Nokia in 1995. Since October 2009, he has served as CEO of NSN, the former joint venture between Nokia and Siemens that is now fully owned by Nokia. Risto Siilasmaa, chairman of the Nokia board of directors and interim CEO, will return to focusing exclusively on his role as chairman.
For the long term, Nokia has singled out three areas important to the connected world and where it wants to leads: device and data connectivity; location services between the real and virtual worlds; and innovation, including in sensing, radio and low power technologies.
Through its Networks business (formerly Nokia Solutions and Networks, or NSN), Nokia will invest in innovative products and services needed by telecoms operators to manage the increase in wireless data traffic.
Through its HERE business, Nokia will invest to further develop its location cloud to make it the leading source of location intelligence and experiences across many different operating systems, platforms and screens. Investment will target technology for smart, connected cars, cloud-based services for personal mobility and location intelligence, including for the growing segment of wearables and special purpose devices, and location-based analytics for better business decisions.
Through its Technologies business, Nokia will invest in the further development of its innovation portfolio, namely the expansion of its intellectual property licensing programme and the exploration of new technologies for use in potential future products and services. Nokia's continuing businesses invested more than EUR 2.5 billion in research and development in 2013.
Nokia will also seek to improve the efficiency of its capital structure with a EUR 5 billion capital structure optimisation programme that will restart ordinary dividends and reduce interest bearing debt. This programme has planned for at least EUR 800 million of dividends, or EUR 0.11 per share, for both 2013 and this year. Subject to shareholder approval, there will also be a special dividend of EUR 0.26 per share representing EUR 1 billion, a EUR 1.25 billion share repurchase programme, and a debt reduction of around EUR 2 billion by the end of the second quarter of 2016. Once complete, the debt reduction is expected to result in annual run rate savings of at least EUR 100 million on recurring interest costs.
Gross cash at the end of the first quarter reached EUR 6.9 billion and net cash EUR 2.1 billion, from 9.0 billion and 2.3 billion at the end of Q4. Nokia attributed the sequential decline to the repayment of EUR 1.8 billion in debt facilities. If the transaction with Microsoft had closed before the end of Q1, Nokia would have ended the quarter with gross cash of EUR 10.5 billion and net cash at EUR 7.1 billion.
For its governance, Nokia wants to adopt a simple and clear operational model designed to facilitate innovation and growth. As of May, all three businesses will report to the Nokia president and CEO. HERE and Technologies each will have a single leader reporting to the CEO. The Nokia CEO will assume direct control of the Networks business and key Networks leaders will report to him.
The primary operative decision-making body for the company will be the Nokia Group Leadership Team, which will be responsible for group level matters, including the company strategy and overall business portfolio. Effective 1 May, the Nokia Group Leadership Team will replace the current Nokia Leadership Team, chaired by the CEO.
The Group Leadership Team will include CEO Suri, executive VP and CFO Timo Ihamuotila, HERE CEO Michael Halbherr, executive VP and acting head of technologies Henry Tirri, and executive VP and Networks chief financial and operating officer Samih Elhage.
The current Nokia Leadership Team will be disbanded. On 25 April, Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber stepped down from the Nokia Leadership Team and transferred to Microsoft. In addition, Louise Pentland, Juha Akras and Kai Oistamo will step down from the Nokia Leadership Team from May and leave the company to pursue opportunities outside of Nokia.
Hans-Jurgen Bill will become executive VP of Human Resources, Barry French the executive VP of marketing and corporate affairs, and Maria Varsellona the executive VP and chief legal officer, effective May 1, 2014.
Finally, Networks and Technologies will operate under the Nokia brand. HERE will retain its distinct identity within the Nokia family and, where appropriate, will be identified as "A Nokia Company". The NSN name will no longer be used after a short phase-out period. For financial reporting purposes, Nokia will have four reportable segments: Mobile Broadband and Global Services within Networks, HERE, and Technologies.
