Tuesday, August 4, 2020

Pekka Lundmark, the man who must save the Nokia soldier

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Posted on Jul 31, 2020 at 3:13 p.m.Updated Jul 31, 2020 4:15 p.m.

From telecom equipment to tableware, through lifting cranes in industry and then energy. In her career, Pekka Lundmark has often done the splits. But this time around, the 57-year-old Finnish engineer has chosen to go back to basics. The boss who still supervised the 150 power plants of Fortum during the coronavirus becomes on August 1 the new CEO of Nokia. A company he knows well, having spent ten years there, between 1990 and 2000, just after his studies in physics at the University of Technology in Helsinki.

However, times have changed for the former glory of mobile. In the second quarter, according to the results published Friday morning, Nokia has certainly returned to the green, with a net profit of 94 million euros, against a loss of 193 million at the same time last year. The price jumped 13% on the stock market. But its turnover fell 10.6% to 5 billion, slightly below the consensus of analysts.

Buyout rumors

The task is therefore immense for Pekka Lundmark, who succeeds the Indo-Singaporean Rajeev Suri, at the helm since 2014. The Finn has accepted one of the most difficult jobs at the moment in telecoms. The stake is none other than to save the Nokia soldier while rumors evoking the takeover by an American company of the third telecoms equipment manufacturer on the market (but the only other European with Ericsson) resurface regularly.

As such, the appointment of Pekka Lundmark was followed closely in Brussels, Washington and at the Elysée. In short, wherever we look for alternatives to Chinese Huawei, world number one. According to our information, Agnès Pannier Runacher, the Deputy Minister in charge of industry, must also meet him by video in the coming days.

A trained physicist, Pekka Lundmark will now have to slip into the shoes of a diplomat. ” He is someone who knows how to navigate geopolitical complexities, an essential quality to be able to seize the opportunities linked to the decoupling of China and the United States ”, explains Stéphane Téral, analyst at LightCounting in San Francisco and a good expert on the file.

1,200 jobs threatened in France

Social and technological topics also await Pekka Lundmark. In France, the group that bought Alcatel Lucent has just launched its fourth social plan in four years. More than 1,200 jobs, or a third of its workforce in France, are threatened. Another blow, the Finnish equipment manufacturer was ousted from the Chinese 5G market, the largest in the world.

And at the end of 2019, the group had lost 23% on the stock market in one day, unprecedented in 30 years, after announcing that it would not pay dividends during the semester in order to conserve cash to invest in 5G, the new mobile telephony standard which is due to arrive in France at the end of 2020.

However, the Espoo group has succeeded in providing its 5G antennas to American, South Korean and Japanese operators, the first to launch 5G. Its equipment is present in 32 active 5G networks around the world. In France, Orange and Free have also retained it as one of their suppliers. But elsewhere in Europe, many operators forced to abandon Huawei because of American pressure, such as Telefonica in Germany or British Telecom in the United Kingdom, have finally chosen Ericsson… and not Nokia.

Sorting through innovations

In one year, Nokia’s market share has increased from 20% to 18.8%, according to LightCounting. However, in 2015, according to Dell’Oro, the equipment manufacturer still held more than 24% of the market. ” Pekka Lundmark’s number one priority is going to be restoring morale, resumes Stéphane Téral. Nokia remains the only equipment supplier comparable to Huawei, since it covers all areas, while being in the top 3 or 5 in each segment. And to cope with the R & D machine of Huawei, Nokia has a prestigious center, the Bell Labs. However, it will be necessary to increase the R & D budget and to sort through all the innovations of Bell Labs to identify those that can lead as quickly as possible. “

To sort it out, Nokia will be able to rely on the fresh outlook of Pekka Lundmark. Rajeev Suri had spent 25 years in the house. Nokia is therefore offering a new start with this boss who knows the industry well for having been CEO for ten years of the Finnish specialist in lifting cranes, Konecranes. Pekka Lundmark then went into energy to become CEO of Fortum, the third largest energy company in Scandinavia.

« Pekka Lundmark has the technical expertise to run a telecoms equipment manufacturer but also knows vertical markets, says an inside source. This probably played a role in his appointment “. Because with 5G, for the first time in the history of telecoms, networks will also be designed for manufacturers and not just for individuals. Nokia intends to rely on the industrial know-how of Pekka Lundmark to find color on 5G.

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