Nokia endured a 40 per cent drop in profits during the second quarter of 2010 as its embattled leader bemoaned the detrimental effect that speculation about his future is having.
The mobile phone giant's Q2 sales were almost flat year on year at €10bn (£8.4bn), while net profit slumped two-fifths to €227m. Revenue from devices and services was up three per cent to €6.8bn but turnover at joint venture Nokia Siemens Networks (NSN) dropped five per cent to just over €3bn.
Chief executive Olli-Pekka Kallasvuo said: "Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future. For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong. We are also encouraged by the solid second quarter performance of our mobile phone business, helped by an improving line-up of affordable models."
Earlier this week NSN agreed a $1.2bn deal to acquire large chunks of rival Motorola's network equipment business. But, despite this, the Wall Street Journal (WSJ) has reported that both partners harbour doubts about the venture and are considering an exit.
The WSJ also broke the news this week that Nokia may be hunting a new chief executive. Kallasvuo is reportedly set to take the fall for failing to establish the Finnish firm in the smartphone market.
In today's results announcement, he claimed the soon to be released Nokia N8 "will have a user experience superior to that of any smartphone Nokia has created".
More such state-of-the-art models will follow, claimed Kallasvuo, which will "kick-star Nokia's fightback at the higher end of the market".
Speaking to CNBC earlier today, the beleaguered executive refused to be drawn on what his future held. But he lamented the effect the speculation is having on the firm.
"There has been a lot of speculation on my position, on myself, during the last couple of weeks and that is not good for Nokia," he said. "[It] must be brought to an end one way or another."
Nick Jones, distinguished analyst at Gartner, claimed a new leader would be a good move for the mobile phone maker.
"My feeling is that Kallasvuo has lost the confidence of investors and a change would be the best thing," he said. "The problem Nokia faces is finding a European Steve Jobs to replace [him]. The new CEO needs the experience to run a company the size of Nokia, the charisma to pacify investors, the knowledge to recognise bad products and strategies, and the courage to kill them.
"I believe the new CEO needs to be someone already in the mobile space, because an outsider would take too long to get up to speed on how this business works. But there are not a lot of obvious candidates who have all these traits plus the ability to fit into a Finnish management culture."
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