With Microsoft Deal Done, Nokia Names Rajeev Suri CEO, $6.9 Billion in Buybacks, Dividends and Debt Cuts
Nokia late Monday said it was naming former networking unit head Rajeev Suri as its new chief executive.
With the sale of its flagship device business to Microsoft, Nokia also announced a restructuring of its remaining business as well as a 5 billion Euro ($6.9 billion) capital improvement program, which includes a stock buyback, dividend boost and debt reduction.
Suri joined Nokia in 1995 and served as head of the company’s NSN cellular equipment business, which had been run as a joint venture with Siemens until Nokia bought out its German partner a while back.
“As Nokia opens this new chapter, the Nokia Board and I are confident that Rajeev is the right person to lead the company forward,” Chairman Risto Siilasmaa said in a statement. “He has a proven ability to create strategic clarity, drive innovation and growth, ensure disciplined execution, and deliver results. We believe that his passion for technology will help ensure that Nokia continues to deliver innovations that have a positive impact on people’s lives.”
Siilasmaa, who had been Nokia’s interim CEO since the Microsoft deal was announced, will return to his Chairman-only post as Suri takes the helm May 1.
In addition to executives Stephen Elop, Chris Weber, Jo Harlow and others that joined Microsoft, Nokia announced several other departures effective May 1. Chief legal officer Louise Pentland, HR chief Juha Äkräs and corporate development Kai Öistämö are all leaving the company, Nokia said.
As for the capital plan, Nokia said it intends to pay $1.1 billion in ordinary dividends this year and next, a $1.38 billion one-time dividend, $1.7 billion share repurchase and a $3 billion debt reduction to be completed by the end of the second quarter 2016.
“We are committed to effective deployment of capital to drive future value creation,” CFO Timo Ihamuotila said in a statement. “We believe our planned comprehensive EUR 5 billion capital structure optimization program enables Nokia to make quick and orderly progress towards a more efficient capital structure, and is aligned with the long-term interests of our customers and shareholders. Together with our continued focus on solid business execution, these capital structure enhancements support our longer-term target to return to an investment grade credit rating, which would further affirm our long-term competitive strength and support our strategic objectives.”
While there has been some speculation Nokia might look to unload the Here location business, Suri reaffirmed Nokia’s commitment to the unit.
“Our view is that only one other company has location services that come close to the depth and breadth of those from Here – and Here has the advantage of being independent from any operating system or single business model,” Suri said in a statement, making a clear reference to Google. Nokia, meanwhile, provides location to Microsoft, Amazon and Yahoo, among others.
He also committed to investing in the network gear business he has been running and to the company’s advanced technology business, which includes patent licensing and “exploring new technologies for use in potential future products and services.” Nokia has kept the office of its CTO, but hasn’t really said where it might focus those efforts. Nokia’s press release Monday made reference to sensors and the interplay between multiple radio technologies.
“Nokia’s industry leading intellectual property has the potential to create significant value for our licensees and our shareholders,” Suri said. “With the strength of our Technologies team and continuing investment in advanced research and development, we can also drive new opportunities for Nokia in both business-to-business and consumer markets.”
The company plans to phase out the use of the NSN name and instead operate the networks business under the Nokia brand, while the Here location business will use that name and, in some cases, be dubbed “A Nokia Company.”
Update: Here’s a video of Suri that Nokia posted to YouTube.
Update 2, 10:04 p.m.: Meanwhile, here are Nokia’s financial results for last quarter.