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« What Happens Now to Nokia Lumia and Windows Phone, After Microsoft Throws Nokia Under the Bus? (Updated) | Main | Congratulations Mike Short for CBE Honours at Queens Birthday in UK - here his Foreword to my 3rd book »

June 27, 2012

Comments

vladkr

I recently read the article "Exhausting week for Nokia CEO" in Helsingin Sanomat (http://www.hs.fi/english/article/Exhausting+week+for+Nokia+CEO/1329104336880)

I can't understand how a person, who is paid millions of euros can't face his mistakes. Actually, since I follow Elop's history at Nokia, I never saw any mea-culpa. All bad decisions that could be made were taken by Elop :
- exclusive partnership with unliked MS
- blocus on N9 and now on 808 pureview
- closure of factories (Lumia are made by Compal, featurephone are made in India by Fly mobile... what is being manufactured by Nokia now?)
- Sales of family jewellery : Vertu, Patents, business units
- Firing engineers and workers, keeping (hiring) managers; managers usually don't produce anything.

And that's not to mention lies. To me, Nokia is dead (my recent experience in Russia definitely convinced me... although I didn't really need to) and artificially maintained alive.

I would add that what's happening now to Nokia right now, is what may happen to MS; remember one thing : during the golden 90s, people had no choice. Cheap windows or expensive mac. Now world changed : people prefer use "one click-started" tablets or perpetually on smartphones for internet/FB/Twitter than wait 30seconds+ to start their windows powered computer... people have choice now.

foo

"The ironic, is that this time, Nokia is actually on a burning platform (WP 7.5)"

LOL

Elop conducted Nokia from a burning platform to the other!

cycnus

Tomi,

I was wondering if you already see this nokia ads on youtube
http://www.youtube.com/watch?v=GJZW97c4uvw
there were symbian/meego tablet in the ads?

Asko

@Aikon

Board of Directors is proposed by selection committee and approved by the shareholders at the general meeting. The selection committee is composed from board of directors. If I remember right it is three persons committee at Nokia.

Actually the 'real' shareholders don't have anything to say to it because large American institutional shareholders who don't care anything about Nokia will approve anything that board or directors or selection committee suggest. The large American institutional shareholders have the majority of shares and votes. So in practice the board of directors itself selects the new members to the board.

At the last general meeting small shareholders didn't want Elop to be in the board of directors so that board of directors could properly supervise Elop but they were voted down by the large shareholders.

KPOM

Symbian was unsustainable, and MeeGo wasn't ready. I think it was worth a shot to try Windows Phone in the US, where Nokia had nothing to lose. However, it shouldn't have been an all-or-nothing affair. Android also would have been the safer bet.

I still think, no matter what, the seeds of Nokia's fall were sown in 2009 and 2010. Samsung's rise began in late 2009, and really picked up steam after Nokia's "burning platform" announcement last February, as well as the release of the Galaxy S2 last April. Now with the Galaxy S3 they have an iPhone-type hit on their hands. Nokia would still have been up against that even if they executed their strategy perfectly. OPK should have considered Android for the US market in 2009 instead of giving lip service to North America and insisting that Symbian would sell. If they stumbled upon a hit Android device in the US, perhaps they could have rolled that out worldwide rather than waste their time with MeeGo and later Windows Phone.

Aikon

cycnus,
it's an old (pre N9 video) showing what Nokia could be with it's own MeeGo/Meltemi.
It's just a concept from 2010/2011.
But, the ideas was good! Beautiful UI.

cycnus

Can Windows 8 PC Partners Trust Microsoft?
http://www.forbes.com/sites/patrickmoorhead/2012/06/25/can-windows-8-pc-partners-trust-microsoft-in-the-future/

foo

@KPOM "Symbian was unsustainable, and MeeGo wasn't ready. I think it was worth a shot to try Windows Phone in the US, where Nokia had nothing to lose. However, it shouldn't have been an all-or-nothing affair. Android also would have been the safer bet."

I completely agree with you.

Elop could have made an experiment with Windows Phone; but putting all the eggs in Microsoft's basket was a big mistake. At least he should have left options open. But he closed all the doors and put fire on all the bridges, so Nokia couldn't go back.

As a Nokia executive said months ago: "Plan B is that Plan A must work". Except it didn't work.

P

@KPOM, @foo

What is not ready with MeeGo?

If Meego wasn't ready, what about WP?

Aikon

@foo
putting all the eggs in Microsoft's basket was definitely NOT a big mistake.
It was an initial plan.

@P MeeGo Nokia N9 was kind of still wet when it was released. Now when it's PR1.2 it's pretty good.

SaloGuy

Jim Collins
How the Mighty Fall
Phase 5: Capitulation to irrelevance or death

Nokia: Check

Martin von Willebrand

To my understanding, the biggest shareholders are closely listened to when the committee makes its proposal on new board members. There is a tradition that the biggest ones propose members. Interesting is that the biggest shareholders hold 5-10 (now with NOK tumbling, probably 20x) times more MSFT than NOK.
It's even more sad that, if there was an MSFT owner strategy to populate NOK board and CEO, it failed in many respects, but not in destroying NOK and most of its assets.

So Vatar

@Zacharia Smith:

You ask the right question, why does the board allow Elop to destroy Nokia? As there is no rational answer a lot of conspiracy theories are woven.

For the record, this is Nokia's current BOD and the people currently responsible to keep Elop in his job:

Chairman
Jorma Ollila

Vice Chairman
Dame Marjorie Scardino

Members:
Stephen Elop
Dr. Bengt Holmström
Dr. Henning Kagermann
Per Karlsson
Jouko Karvinen
Helge Lund
Isabel Marey-Semper
Risto Siilasmaa
Kari Stadigh

I believe there are other former board members that share responsibility for this unmitigated disaster Nokia is in. It would be nice if other better informed readers would complete the list of BOD members (current and former) who backed Elop's devastating decisions.

For me it would be a good list of people to stay away as an investor if one of the shows up in a company I am interested in to invest.

Elop is the front man and and either an awful manager or a MS mole. But it is the BOD that allows this to happen.

Ninvestor

For the board to replace Elop and the Windows Phone + Asha + Cost Cutting + find a way to unload NSN strategy, they'd need to have a new CEO candidate with a better strategy. Who is that and what is that strategy?

Tomi is fixated on what Nokia was 2 years ago. That is irrelevant. Nokia has no birth right to be the leader in Mobile. Their lead with a temporary aberration that ended.

Where they are now, with $8B market cap, $5B in net cash, having would down native SW, with a market that does not want NSN at any price, with at least 70,000 excess personnel, and a brand that is not cool. What do you want them to do differently than Elop is doing?

Hire more people instead of firing? Open more factories instead of closing? Start yet another internal OS project after all the proven failures? What?

The *only* thing that can be argued about - going forward, not looking back - is if it makes more sense to continue with MS till Windows 8 (which was always the plan) or to switch to Android (a space crowded with Samsung, Moto, HTC, LG, Sony, ZTE, etc). That is it. That is the only decision open for debate. All else is imply common sense.

So your questions should be: Why doesn't the board fire Elop (paying his golden parachute and admitting they were wrong), pay another hiring bonus, pay Microsoft about $5B in liquidated damages for breach of contract, confuse customers even more by abandoning Windows Phone, have yet another 1 year with no sales as you retool to Android?

Seriously? Do you think that is something easy for the board to do?

You must be in high-school still.

The current investors own the stock now, at $2, and they care about what the stock will do from now. Not how it got from $40 to $2. You don't seem to understand that the stock got from $40 to $2 because the investors then were SELLING.

For people who own the stock at $2, ditching NSN and selling the patents for $8B and selling the smartphone division to Microsoft for $8B represents a 100% stock gain. They'd love to see it happen. A quick pay-off.

The investors that own Nokia today at $2 are happy. There will be no revolt. Except for some clueless retail investors that are emotional and want to make noise at annual meetings. i.e. the losers.

gorrilla

Of course it would not be easy for the board to exchange Elop for someone who understands hitech strategy, the board being senile, walking dead has-beens who have aeons ago lost their ambition and ability to think out of the box, marinated, dulled and disillusioned in corporative administration jobs.

Those kind of people do no harm in such industry that moves s.l.o.w.l.y., in consumer electronics it either means death or takeover.

WP is a double edged sword. On the other hand it is crippled windows, a disappoinment for someone wanting a pc-experience, on the other hand it is utterly boring, not offering anything for the consumers thirsty for something new, hip and likeable.

Asko

@So Vatar

You have the old list of board members. For example the current chair is Risto Siilasmaa.

Tomi T Ahonen

(Will do responses in short groups)

Hi JO, Spawn, Dipankar, Jujim, Lasko and Kenny

JO - bada is actually selling pretty well in Emerging World markets and is (currently) targeting low end of smarpthones vs Tizen at the top end. They may converge, we don't know yet. But my vibe is that bada is underperforming to Samsung's management expectations.

Spawn - yeah.. Elop should have been fired long ago..

Dipankar - the Q2 sales levels have mostly already happened and the early AT&T sales suggest perhaps a million in Lumia 900 in USA alone. If rest of Nokia's Lumia grew from 2M to 3M, the 4M number is reasonable but we'll know in about a month. The carnage will happen in Q3..

Jujim - haha, yeah.. but there is regular business for Nokia to replace old handsets and there is precious else to offer in mid-price smartphones than Lumia 710 and 610. I think the Lumia 800 & 900 are pretty dead but mid-price will sell and the top line will have a fire sale. Yes, the 3.1M is still optimistic haha..

Lasko - likely true..

Kenny - thanks. Lets come back and compare with the results come out. Cheers!

Thank you all for the comments, keep them coming

Tomi Ahonen :-)

N9

@Ninvestor you are absolutely right, NOkia is long past time to do what ever, its toast dead kaput finito, Elop made sure of that, board as well.
All I expect is the future litigation against all of this, Nokia is headed for well disaster, and we are all prety sure they will be no more NOKIA as we know it by the end of the year...

I agree with you time to do something is long gone, we are just on the side watching the boat sink and witnessing the pillage of the silverware...

cheers

So Vatar

Thanks, Asko, I definitely got a previous list of the BOD, this is the current one:


Chairman Risto Siilasmaa
b. 1966
Chairman of the Board of Directors of Nokia Corporation. Member since 2008. Chairman since 2012. Chairman of the Corporate Governance and Nomination Committee.

Vice Chairman Dame Marjorie Scardino
b. 1947
Chief Executive and member of the Board of Directors of Pearson plc. Board member since 2001. Vice Chairman since 2007. Member of the Corporate Governance and Nomination Committee. Member of the Personnel Committee.

Bruce Brown
b. 1958
Chief Technology Officer of The Procter & Gamble Company. Board member since May 3, 2012. Member of the Personnel Committee.

Stephen Elop
b. 1963
President and CEO of Nokia Corporation. Chairman of the Nokia Leadership Team. Board member since May 3, 2011.

Henning Kagermann
b. 1947
Board member since 2007. Chairman of the Personnel Committee. Member of the Corporate Governance and Nomination Committee.

Jouko Karvinen
b. 1957
CEO of Stora Enso Oyj. Board member since May 3, 2011. Chairman of the Audit Committee. Member of the Corporate Governance and Nomination Committee.

Helge Lund
b. 1962
President and CEO of Statoil ASA. Board member since May 3, 2011. Member of the Personnel Committee.

Isabel Marey-Semper
b. 1967
Director of Advanced Research of L’Oréal Group. Board member since 2009. Member of the Audit Committee.

Mårten Mickos
b. 1962
Chief Executive Officer of Eucalyptus Systems, Inc. Board member since May 3, 2012.

Elizabeth Nelson
b. 1960
Independent Corporate Advisor. Board member since May 3, 2012. Member of the Audit Committee.

Kari Stadigh
b. 1955
Group CEO and President of Sampo plc. Board member since May 3, 2011. Member of the Personnel Committee.

Btw, I agree that the former Nokia cannot be reinstated, too much has happened. I do not agree that nothing can be done, nothing should be tried.
Honestly, at this point only a leader like Steve Jobs could save Nokia from irrelevancy and make back a few bucks for shareholders. Not many JObs around, and if so they are hard to lure. But this is why the BOD gets paid, to do something for Nokia and its shareholders. If they just plan to watch how this catastrophe goes on, then they are on the wrong prosition and should have the decency to resign.

Or the BOD recognizes Nokia's failure, and starts to actively sell the parts to get back $$$ for shareholders. But every week they continue on this path means a further loss for investors, wastes cash, and brings then just closer to bankruptcy (the worst outcome for shareholders).

Earendil Star

I see some not intelligent investors are posting.

First, forgetting what happened over the past two years to Nokia is fine for those who caused the mess and want to come out clean from their doings. Not ok for those who were on board from the start and saw the THT Elop suicidal mission take place after hijacking the Nokia "plane".

Second, compared to what has happened, it would have been better to just wind down the company two years ago. Not so much value destruction would have taken place in such a scenario. The reason is that leeches à la MS would have had to pay a hefty price to get what they got for free in the meantime.

Third, a possible future strategy would not mean to renounce WP immediately. What should happen is that Nokia should denounce the agreement with MS as fraudulent and void. Take back gifts given to MS for free. Go on with the WP strategy, especially in the US (where it might work a bit with WP8) while reinstating alternative routes (e.g. Symbian / Maemo-Meego / Meltemi). Android would be nice, but I'm afraid that would be too much given the current state of Nokia. Topmost talent has already left the company. Money coming in in the form of reparations and patent licence fees from MS would allow to survive during the transition stage.

In any case, this will not happen. It is now too late and the company is under an imperius curse from Redmond. Regulators are blind. A legal suit would take ages. Only attritional litigation will go on, further causing Nokia to bleed and suffer.

And all of us who said from inception (February 2011) that this course of action by Nokia was crazy now feel vindicated. But being right does not means happier in this case.

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