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Nokia's Siilasmaa: Goal to regain competitiveness

Speaking in public for the first time as Nokia board chairman, Risto Siilasmaa told an Yle talk show Thursday evening that the ailing company will continue making tough cuts until its competitiveness is restored.

Nokian hallituksen puheenjohtaja Risto Siilasmaa.
Nokia board chairman Risto Siilasmaa. Image: Yle

Nokia’s share price has dropped by a third since Siilasmaa assumed his post in early May.

“Nothing has changed at the end of the day if the number of shares you own remains the same,” replied Siilasmaa when asked about the effect the company’s spiraling share price was having on small-time investors.

Last month Siilasmaa took the reins from longtime Nokia chairman Jorma Ollila, who spent 27 years of his life with the company. F-Secure founder Siilasmaa’s time at the helm has been one crisis after the other. Two weeks ago the company announced redundancy talks aimed at slashing its worldwide workforce by 10,000, with nearly 4,000 jobs to go in Finland. This week Nokia’s share price sunk to its lowest level since Finland adopted the euro in 2001.

Graphic presentation of Nokia's stock price.
Image: Yle Uutisgrafiikka
The Nokia chair rebuffed claims that the company had put all of its eggs in one basket by working with Microsoft.

Siilasmaa pointed out that the company owned five business areas, including its location services, patent stock and network division (Nokia Siemens Networks).

He defended the choice of Windows Phone as the platform to replace its flagging Symbian operating system, which he said had been in steady decline since 2008.

“Symbian’s market share has come down close to zero,” he said of the decision to switch to Windows.

Siilasmaa said Windows Phone had been selected after a critical and detailed study of available options.

He said the Windows Phone 8 platform is a technological first, providing users with a seamless user experience across multiple platforms, from PCs to tablets and smartphones.

According to Siilasmaa, Nokia has a contingency plan in place if the Windows 8 Phone fails to live up to expectations. But he said the company was confident that the product would be a success.

The board chairman was steadfast in his support of beleaguered CEO Stephen Elop, who has come under criticism as the company continues to lose value. Siilasmaa refused to comment on whether a management shakeup was on the cards.

“He came in at a tough time,” Siilasmaa said, adding that Elop’s management style had been "good and transparent."

Analysts weigh in

With five years since the launch of Apple’s iPhone, Nokia’s share price has dropped nearly 90 percent, said analyst Mikael Rautanen at Inderes, adding that, “everyone knows they’re in crisis, which is hurting their brand.”

But according to Rautanen, the sector is extremely dynamic, meaning that things can turn around just as quickly as they go south. “One or two hit products can change everything.”

Industry analyst Hannu Rauhala of Pohjola Bank meanwhile said there was no certainty as to the success of the new Windows 8 operating system.

“Investors are most concerned about Nokia’s burn rate,” he explained.

Patent legacy

Nokia currently holds 321 patents in Finland, the majority of which were granted between 1997 and 2002. The company also has three utility models under its belt, which typically carry shorter terms than patents.

The mobile phone giant has repeatedly highlighted the significance of its patents. In the first quarter of this year, Nokia said it expected license fees to bring in half a billion euros annually.

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