Nokia Said to Favor Siilasmaa as Chairman

By Diana ben-Aaron - Jan 5, 2012 8:12 PM GMT+0700

Nokia Oyj (NOK1V) considers Risto Siilasmaa, the founder of software maker F-Secure Oyj, a frontrunner to succeed Chairman Jorma Ollila this year, a person familiar with the matter said.

No decision has been made because Nokia’s nomination committee hasn’t met to recommend a new chairman, said the person, who asked not to be identified because the plan isn’t public. Nokia declined to comment. The company typically announces board changes in conjunction with its fourth-quarter results, scheduled this year for Jan. 26.

Siilasmaa, 45, is chairman of F-Secure (FSC1V@FH) and of telephone company Elisa Oyj. Known in Finland as a representative for entrepreneurs and business investors, he joined Nokia’s board in 2008. If elected chairman, he’ll oversee Chief Executive Officer Stephen Elop’s efforts to restore Espoo, Finland-based Nokia’s fortunes in the smartphone segment after the world’s biggest handset maker lost two thirds of its market share in four years and more than 60 billion euros ($77 billion) in market value.

“Siilasmaa is one of the few people on the board with a technology background and should be able to support and challenge the CEO,” Sami Sarkamies, an analyst at Nordea Bank, said by telephone. “He has probably been instrumental in the company’s strategic change so far, and can’t really be blamed for past mistakes as he’s only been there for three years.”

Siilasmaa declined to comment in an e-mail to Bloomberg. Helsingin Sanomat newspaper reported the news today.

Shares Climb

Nokia climbed as much as 5.9 percent in Helsinki trading after blogger Eldar Murtazin wrote that Nokia and Microsoft Corp. (MSFT) executives will meet soon to discuss a potential transaction involving the sale of Nokia’s smartphone unit to Microsoft.

Nokia spokesman Tomi Kuuppelomaeki declined to comment. Frank Shaw, a spokesman for Microsoft, didn’t immediately return calls seeking comment before regular business hours. The shares were up 4.8 percent at 4.07 euros as of 3:03 p.m. Nokia’s stock plummeted 51 percent last year, its fourth annual fall since soaring 71 percent in 2007.

Speculation that Nokia could be acquired by Microsoft resurfaced repeatedly after Google Inc. acquired Motorola Mobility Inc. last year. Elop has rebutted the speculation and said on Finnish television last month that Nokia headquarters will remain in Finland as long as he is CEO. Danske Bank said in December that the mobile-phone maker could sell the smartphone business to Microsoft.

Rating

Credit Suisse analysts today raised Nokia to “outperform” from “underperform” and increased its price estimate to 6 euros from 4 euros. The bank said it “fundamentally” believes Nokia’s focus on Windows will allow it to drive a recovery this year in both sales and earnings.

Ollila, 61, said at Nokia’s annual general meeting on May 3 last year that he was willing to continue as chairman until this year’s shareholder meeting. As CEO from 1992 to 2006, he transformed Nokia from an industrial conglomerate to the world’s top mobile-phone maker. He has been chairman since 1999. Last year he replaced hand-picked CEO successor Olli-Pekka Kallasvuo with Elop, a Microsoft executive, to reverse the tailspin.

“Siilasmaa doesn’t have that much global experience but he’s a fast mover,” said Helena Nordman-Knutson, an analyst at Pareto Oehman in Stockholm. The Finnish base is the main source of continuity for investors, she said.

2007 iPhone Debut

Other Finns on the Nokia board are busy as CEOs of their own companies, making a choice of Siilasmaa logical, she said. Matti Alahuhta, the CEO of elevator maker Kone Oyj and an executive vice president at Nokia during Ollila’s time as CEO, would also have been a good choice, she added. Alahuhta said in December that he will remain as CEO of Kone.

After Apple Inc. introduced the iPhone in 2007, Nokia’s slow-moving product organization was unable to keep up with consumer demands for user-friendliness and integration with Internet content. The company’s smartphone market share fell from 50.8 percent at the iPhone’s debut to 16 percent in the third quarter of 2011, according to Gartner Inc.

It remains the world’s largest maker of mobile phones overall, with factories around the world churning out as many as a million handsets a day. Elop has adopted Microsoft’s Windows Phone software for the company’s latest smartphone line, called Lumia, and deepened the partnership with the Redmond, Washington software maker.

Siilasmaa founded F-Secure, originally called Data Fellows, in 1988 as a student at the Finnish technology institute that is now Aalto University. The company listed shares on the Helsinki stock exchange in 1999, the last major high-tech company to join the stock exchange in the Nordic country.

Startup Investor

His lack of experience at companies on the scale of Nokia is a weakness and is the main reason Siilasmaa wasn’t seen as a shoo-in for the chairman job earlier, Nordea’s Sarkamies said.

Siilasmaa owned 39.73 percent of F-Secure as of Dec. 31, according to the company’s website. He has invested in Finnish startups including online shopping portal Fruugo Oy, together with Ollila, and micropayment supplier Ape Payment Oy, and worked with the Finnish government to establish startup incubators.

Siilasmaa serves on Nokia’s corporate governance and nominations committee, along with former SAP AG CEO Henning Kagermann and Pearson Plc CEO Marjorie Scardino, who is also vice chairwoman.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net