Outgoing Nokia board chief concedes mistakes

HELSINKI (AP) — Nokia Corp.'s outgoing board chairman said Thursday the company made mistakes during his tenure at the helm of the cell phone maker that held the No. 1 spot for 14 years.

Jorma Ollila told angry shareholders at the Finnish firm's annual general meeting that Nokia's performance was below-par as it struggles in a transition after teaming up with Microsoft Corp. a year ago.

"The transformation period is truly painful. We cannot be satisfied with our economic performance or that so many Nokia workers have had to leave the company because of the changes," Ollila said.

Last year, Nokia announced more than 10,000 layoffs, aimed at cutting operating expenses by €1 billion ($1.31 billion) by 2013 and it has not ruled out more cutbacks.

Nokia's share price has more than halved in the past 12 months, dropping to a 15-year low of €2.98 ($3.91) in April after it announced huge first-quarter losses and a 30 percent drop in sales. Analysts said it had lost the spot as the world's biggest maker of mobile phones.

On Thursday, Nokia shares closed down 1 percent at €2.67 ($3.50) on the Helsinki Stock Exchange.

Last week, Standard and Poor's downgraded Nokia's credit rating by one notch and warned that it may reduce it again unless the company's performance improves. The cut followed earlier recent downgrades by other ratings agencies, including Fitch which dropped it to junk status while Moody's cut it to near junk status.

Stephen Elop, the company's first-non Finnish CEO who was appointed in September 2010, described Nokia's situation at the time as being "a burning platform."

A former Microsoft executive who had earlier worked closely with Nokia, Elop said he would guide it through a period of "disruption," announcing the Microsoft deal five months later, in a move which will place the Windows operating system in Nokia's new phones, phasing out the MeeGo and Symbian platforms, considered clumsy by many operators.

Since October, Nokia has launched several versions of Windows-based Lumia phones with sales of more than 2 million in the first quarter. Elop said Nokia had a "clear sense of urgency to move our strategy forward even faster."

Ollila, who was Nokia CEO in 1992-2006 and has headed the board since 1999, said the company had been able "to predict years ago that the Internet would be in everyone's pockets" but had failed to develop necessary "ecosystems and technology" as it had hoped. "That is why we needed a new beginning," he said.

The 61-year-old Ollila is being succeeded as chairman by Risto Siilasmaa, who founded Data Fellows software company in 1988 that developed into the global computer security company, F-Secure Corp.

Siilasmaa told shareholders that he fully backed Elop and the executive leadership.

"Nokia is a global company which has roots in Finland and will continue to do so," Siilasmaa said.

Nokia is fighting fierce competition in the top-end from Apple Inc.'s iPhone and other makers using Google Inc.'s popular Android software, including Samsung Electronics Co. and HTC of Taiwan. It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.

Boston-based Strategy Analytics says Samsung surpassed Nokia as the world's largest seller of cell phones by volume in the first quarter, grabbing a 25 percent global market share against Nokia's 22 percent.

The agency also said Samsung had overtaken Apple as the largest maker of smartphones selling 44.5 million units against Apple's 35 million, with Nokia falling to third place with under 12 million sold in the quarter.