Nokia has named the head of its networks division, Rajeev Suri, as its new CEO from May 1. He will take over from company chairman Risto Siilasmaa, who has been serving as acting CEO.
On Tuesday it also reported a profit for its continuing operations, but a drop in sales and an overall loss for the first quarter. Nokia retains its networking equipment unit, the Here mapping business, and its patent portfolio following completion of the sale of its Devices & Services business to Microsoft on Friday.
A majority of Nokia’s future revenue will come from the networking unit, previously headed by Suri, making him a logical appointment as CEO. Suri has served as the CEO of Nokia Solutions and Networks (formerly the joint venture Nokia Siemens Networks) since October 2009. Now that it has full control of the division, Nokia plans to refer to NSN simply as its Networks business unit.
The success of the unit will be key to the company’s future. As network operators adopt cloud-based infrastructures and technologies such as network functions virtualization, their networks will become more nimble and less reliant on proprietary hardware. Nokia plans to take advantage of these changes, saying it has conducted trials and pre-commercial live projects with more than 50 customers last year.
But the company also aims to get the most out of its patent portfolio, and will invest in location services. The sale of the devices business to Microsoft leaves Nokia with a significant cash pile, equivalent to €7.1 billion in net cash if the sale had closed during the first quarter, it said.
The company reported a first-quarter loss of €229 million (US$312 million), compared to €339 million a year earlier. However, excluding the devices business bought by Microsoft Nokia would have made a net profit of €108 million, up from a net loss of €98 million a year earlier, it said Tuesday.
Sales from continuing operations fell 15 percent year on year, to €2.66 billion (US$3.66 billion as of March 31, the last day of the period reported), while sales of discontinued operations (the devices business) fell 30 percent, to €1.93 billion.
Networks revenue fell 17 percent to €2.33 billion. Sales at the smaller Here unit dropped 3 percent to €209 million, while patent revenue increased 7 percent to €131 million.
Phone sales drop
Nokia didn’t say how many phones it sold in the quarter, indicating only that sales had declined in both value and volume, and that the average selling price of the phones had also declined. It attributed the year-on-year decline in unit sales to lower feature phone shipments, adding that this was partially offset by higher smartphone volumes. A year earlier, it sold around 5.6 million Lumia smartphones.
The sales drop and the momentum of competing platforms highlight the challenge faced by the phone business’s new owner, Microsoft, as it seeks to increase the popularity of both Windows Phone and the Lumia family.