The new Nokia boss says goodbye to the strategy of his predecessor and repositions the Finnish network equipment provider. CEO Pekka Lundmark wants to catch up on controversial market leader Huawei and Swedish competitor Ericsson by making Nokia the leading 5G supplier. “We will invest what is necessary to win at 5G,” said Lundmark on Thursday when presenting the figures for the third quarter. A mixed result and the prospect of a year burdened by high investments 2021 sent the share downhill.

Nokia should be able to react better to market developments and customer requests in the future. Lundmark, who had only succeeded Rajeev Suri in August, says goodbye to the old strategy of selling everything from antenna to core network and software to a network operator. To this end, the CEO is repositioning the core business in four independent areas, which are also given operational and financial responsibility for their business activities and the Group’s contribution.

Four core areas From 2021 Nokia’s core business consists of the units Mobile Network, IP and Fixed Network, Cloud and Services, and Nokia Technologies. The latter remains largely untouched and primarily manages the equipment manufacturer’s broad patent portfolio. Another unit should take care of customers and marketing. There are also administrative departments for strategy, law, human resources and finance. The company plans to provide further details in mid-December and at its analyst conference scheduled for March.

Nokia is responding to the changing business in the industry. While the suppliers used to equip a network operator from top to bottom and were able to bind their customers with proprietary technology, the industry today demands compatible solutions and open standards. In addition, western carriers are increasingly looking for alternatives to Huawei technology. Lundmark also wants to focus on the service segment in the future: “We see an opportunity to take on a leading role in ‘Network-as-a-Service’ for network operators and industrial customers.”

Share crashes But the way into this future will be a rocky one. “I don’t doubt Nokia’s enormous potential, even if it will take time to fulfill,” Lundmark said. The CEO expects the necessary investments to weigh on the financial results for the coming year. Nokia also corrected its forecast for the current financial year downwards slightly. The network equipment supplier’s share lost almost percent after the announcements on Thursday.

In the third quarter, Nokia was able to make its profit despite declining revenues increase. The bottom line was a surplus of 197 million euros and thus more than twice as much as a year earlier. Even in day-to-day business, more stuck with the company. Although net sales fell by seven percent to 5.3 billion euros, operating profit adjusted for special items rose by two percent to 486 million euros. Analysts had expected a bit more on average.

(vbr)