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Nokia Reinvents Itself (Again)

You may remember Nokia as the company that once dominated the mobile phone industry but subsequently had to exit that business. What you may not realize is that Nokia has radically and successfully reinvented itself several times during its 150-year history. The company’s most recent transformation may prove to be its most radical yet.

In 2014, Nokia had to make a difficult choice. It could continue massively investing in its mobile device business, or it could head in an entirely new direction. The device business was generating poor results and requiring increasing amounts of capital, which Nokia no longer had. At the same time, the company was in a 50-50 joint venture with Siemens. Nokia Siemens Networks (NSN), which sold networking equipment, had been undergoing a massive turnaround and cost-reduction program; its results were steadily improving. 

When Microsoft expressed interest in taking over Nokia’s device business, Nokia chairman Risto Siilasmaa and the rest of the executive team evaluated their alternatives. They decided to shape a deal that would radically change the company’s trajectory. 

Nokia sold the mobile business to Microsoft. At the same time, CFO Timo Ihamuotila orchestrated a separate deal to buy out Siemens’ share of the NSN joint venture. That gave the company complete control over the unit. These deals have proven essential for funding Nokia’s future. They were well-timed, well-executed moves that were negotiated at the right terms. 

Immediately following these announcements, the company implemented its strategy to win over its new people and organization, with Risto Siilasmaa as chairman and interim CEO. Nokia set up a new portfolio strategy, corporate structure, capital structure, robust business plan, and management team, with president and CEO Rajeev Suri in charge. 

Nokia also focused on delivering operational results across its new portfolio of three businesses while planning its next move. The company intends to take a leading position in a technology-based future where everyone and everything will be connected.

As a result of these moves, Nokia’s share price steadily climbed. Its enterprise value grew 12-fold after bottoming out in July 2012. The company has returned billions of dollars of cash to its shareholders and is once again the most valuable company in Finland.

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