Telecom equipment manufacturers have been facing challenges with declining sales of 5G gear and are now seeking to branch out into emerging sectors like artificial intelligence.
Nokia's Chair, Sari Baldauf, praised Hotard's impressive history of driving growth in tech companies and his extensive knowledge in AI and data center markets, which are vital for Nokia's future.
Following the announcement, Nokia's shares rose by 1.6% to 4.7 euros, while the overall market was up just 0.45%. Analysts at JPMorgan expressed surprise at the CEO change, noting that Lundmark had been effective in stabilizing the company. They suggested that the appointment of a new CEO indicates a long-term plan, especially given Hotard's background in data centers and AI.
Inderes analysts echoed this sentiment, viewing the leadership change as a strategic pivot towards Nokia's Network Infrastructure division, where investments in data centers and AI are expected to create new growth avenues. Last year, Nokia also aimed to expand its capabilities by acquiring U.S. optical networking firm Infinera for $2.3 billion, capitalizing on the surge of investments in data centers driven by AI advancements.
Lundmark, who took the helm at Nokia in 2020, will continue to support Hotard as an advisor until the end of the year. Interestingly, in September, Nokia had dismissed rumors about searching for a new CEO.
The leadership transition planning commenced when Pekka expressed to the Board his intention to step away from executive positions once the business repositioning reached a more advanced phase and a suitable successor was found, Baldauf stated.
Nokia's shares have risen by 27.85% over the last year, although they have declined by more than 90% since their peak in June 2000.
The infrastructure division, which is increasingly incorporating AI technologies, is dedicated to constructing and maintaining communication systems, such as data centers, servers, and routers.
The mobile networks segment focuses on technologies and services that facilitate mobile communication, including the development and management of cell towers and 5G technologies.