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Pekka Lundmark has a lot of work ahead of him at Nokia.

Photo: Getty Images
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Meet Nokia’s new boss

Pekka Lundmark is returning to the Finnish telecom company. What does he bring to its turnaround?

How do you solve a problem like Nokia?

That'll soon be a question for Pekka Lundmark, the company's new chief executive and president. Once known as a handset maker, Nokia's major business is now networking equipment — and it's struggling to keep up with Huawei in the 5G race, even amid concerns that the Chinese tech giant's systems might be vulnerable to state surveillance.

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Nokia announced Monday that longtime CEO Rajeev Suri will step down, making room for Lundmark, a former 1990s-era Nokia executive who has been running Finnish state-owned energy corporation Fortum since 2015. Lundmark will take over this September.

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He's stepping into a lot of work: The company's shares have lost roughly a third of their value over the past year, and just last week its future was cast into doubt after Bloomberg reported that it was considering selling off assets or even a merger.

"Nokia is really playing from behind right now," Mark Cash, a Morningstar equity analyst, told Protocol. "But the opportunity ahead of them is 5G, and they're trying to hit it with a fresh face."

So just who is Pekka Lundmark, and what could his leadership mean for Nokia?

A company man returns

Lundmark is a Finnish native with an engineering master's from Helsinki University of Technology and a history at Nokia. Throughout the 1990s, he served in a variety of roles at the company, including vice president of strategy and business development at Nokia Networks, according to a company press release.

His return will reunite him with the current vice chair of Nokia's board, and incoming chair, Sari Baldauf. She's another executive from Lundmark's first tenure at the company, who said she looks "forward to working closely with him" to create a Nokia "positioned for the future."

The two have already been working closely together in recent years: Baldauf served as Fortum's board chair between 2011 and 2018, during which the company hired Lundmark. In fact, according to Bloomberg, Baldauf recruited Lundmark for the top spot at Fortum.

The state connection

Lundmark's five years at the top of a Finnish-state owned corporation, including managing a complex regulatory process in a contentious takeover of German rival Uniper, likely taught him how to navigate the nuances of mixing business with government,

And that's a skill he'll need to keep flexing at Nokia, where Finnish state investment firm Solidium is the single largest shareholder with a 3.85% stake of the business. After Nokia slashed profit expectations in the fall, citing the costs of competing for 5G, Solidium chief executive Antti Makinen even went public with his frustrations.

"They have communicated their development to investors rather poorly, and we gave them some feisty feedback for it," Makinen told Reuters in January.

The global view

Although Fortum is a Finnish-state backed company, it operates around the world: as a major clean energy provider in Europe and with solar investments in India. So between his tenure there and previous stint on networking inside Nokia, Lundmark has experience navigating sometimes tense global dynamics.

And nowhere are things more geopolitically sensitive in tech right now than the business that defines Nokia's future. Although the company is struggling to keep up in 5G, security concerns about major competitor Huawei could leave an opening for Nokia and other networking tech providers, if they play their cards right.

"Some of the geography-centric bans on Huawei are definitely benefiting Nokia," as well as fellow Nordic competitor Ericsson, Cash said. "But they can be more aggressive in pursuing those opportunities," he added.

U.S. Attorney General William Barr even recently suggested that the American government invest in an alternative like Nokia, although experts, White House economic adviser Larry Kudlow and Vice President Mike Pence all shot down that idea.

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In Europe, regulators have also raised security flags about 5G networks, but more discreetly. For example, last month The European Commission endorsed a joint "toolbox" with advice for mitigating risk across the new systems, including avoiding dependency on a single supplier — but without directly mentioning Huawei.

New leadership with a strong background working within bureaucracy could help Nokia capitalize on such openings. In fact, it might be the only way that Lundmark succeeds.

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