Nokia chairman to step down as purge at top continues

Jorma Ollila, chairman of the troubled Finnish phone maker Nokia, says he will step down within the next 12 months, having overseen the company's rise to dominance as its chief executive in the 1990s.

"It was a tough year, and I expect the year ahead to be a tough one too," Ollila, who led the company from 1992 to 2006, told the annual Nokia shareholders' meeting on Tuesday. He added that he was ready to continue for 12 more months.

"I am committed to continue at the job and do my bit. Throwing in the towel due to earlier difficulties is not my way of doing things," Ollila said.

His departure will continue a clearout at the top of the company triggered by an internal crisis when, in September 2010, Ollila decided that the company had lost its way and forced out his longtime colleague and successor, Olli-Pekka Kallasvuo, replacing him with ex-Microsoft executive Stephen Elop. Ollila indicated his readiness to depart at the time.

Since then Elop has declared that the Symbian operating system used on Nokia smartphones will be killed off, and signed a deal with billions of dollars from Microsoft to use its Windows Phone operating system on top-end phones instead. Those are expected to begin appearing after October this year.

Under Ollila's leadership Nokia rose to the top of the mobile phone business, transforming itself from a company that made rubber boots and TV sets to become the biggest manufacturer of handsets by volume, and until it was passed by Apple earlier this year the largest by revenue ,too.

"For a long time he did a great job at Nokia, but then he made some mistakes that cost shareholders a fortune," said John Strand, founder and chief of Danish firm Strand Consult. "Under Ollila, Nokia was slow in smartphone development, not active in the fight with Apple and Google and failed to succeed in the United States."

Nokia's share of the burgeoning smartphone market has been dropping, with Symbian falling behind Android worldwide at the end of last year, and Apple beginning to catch up with it for total smartphone sales.

Ollila joined Nokia in 1985 and is also chairman of Royal Dutch Shell.

"Ollila's overall record as CEO of Nokia was outstanding, although he struggled to sustain the company's leadership in the United States during the first half of the 2000s," said analyst Neil Mawston from Strategy Analytics. "Some of Nokia's problems in that valuable market can arguably be traced back to Ollila's reign."

In February, Elop compared the company's smartphone strategy with a burning platform in a widely leaked memo, ahead of the announcement of the deal with Microsoft. Elop had also consulted Google about adopting the Android platform, it later emerged.

On Tuesday, Elop reiterated that Nokia would receive billions from Microsoft as part of the deal, including substantial payments for the use of patents.

Shares in Nokia were 0.8% higher at $9.31 in afternoon New York Stock Exchange trading.

Uncertainty over the success of the Microsoft deal has driven Nokia shares down 25% since the Microsoft deal was unveiled, and the stock is trading at a mere third of what it was worth three years ago.

"It has been very painful to be a Nokia shareholder for the past several years," said shareholder Pekka Voutilainen.

Ollila, who owns 700,000 shares in the company, agreed. He is a highly respected business leader in his native Finland, but several smaller shareholders said he should take some responsibility for Nokia's failures.

"If Elop was hired to put out the fire, Ollila is the one who lit it," shareholder Matti Virtanen said at the meeting.