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. Last Updated: 07/27/2016

Nokia Chief Ollila to Step Down Next Year

LONDON -- Nokia chief executive Jorma Ollila, who turned the former maker of toilet paper and rubber boots into the world's largest mobile-phone company, will step down next year and be replaced by handset chief Olli-Pekka Kallasvuo.

Ollila, 54, will step down on June 1, and plans to remain as non-executive chairman, Espoo, Finland-based Nokia said in a statement Monday.

Kallasvuo, 52, joined Nokia in 1980 and now heads the division that makes entry-level mobile phones.

Under Ollila, Nokia's shares surged to make it the most valuable company by market value in Europe in 2000, helped by a 10-fold increase in revenue.

Kallasvuo will have to fight increased competition from Asian and U.S. rivals to defend its market share and profit margins.

"When you look back, it's going to be the early years and the growth that Ollila is remembered for," said Mika Heikkinen, who helps oversee about $980 million in assets at FIM Asset Management in Helsinki.

He sold his Nokia stock on July 21 when Nokia's second-quarter profit missed analysts' estimates. "I don't think there are going to be any major changes because Ollila is staying as chairman."

Nokia said President Pekka Ala-Pietilae will resign "to pursue personal interests." He will take on the role of executive advisor on Oct. 1 and leave Nokia on Feb. 1, 2006.

Ollila, who was named CEO in 1992 to lead Nokia out of a financial crisis, had earlier indicated he may step down when his tenure ends in 2006.

Kallasvuo has been groomed to lead Nokia, which has picked CEOs from its own ranks since before World War II. Kallasvuo was chief financial officer at the company before Ollila moved him to lead the mobile-phone division. His career path mirrors that of Ollila, who oversaw Nokia's finances and then its handset business before becoming CEO.

"There is no doubt surrounding Kallasvuo's excellence in operational matters but I am not 100 percent convinced that he has the strategic depth to meet the increasingly serious challenge from the U.S.A.," said Richard Windsor, an analyst at Nomura International in London.

Nokia's wireless phone brand was the fifth-best-known in the world by 2000, ahead of General Electric, McDonald's and Walt Disney, according to Interbrand. Even as sales of handsets and wireless gear sputtered after 2000, Ollila kept Nokia profitable while rivals such as Motorola and Ericsson slumped to losses.

Ollila was born on Aug. 15, 1950, in Seinaejoki, Western Finland. Ollila, whose father was a maintenance manager at a local fabric factory, was the first in his family to obtain a university degree. He earned a masters in political science in 1976 from the University of Helsinki, a masters in economics in 1978 from the London School of Economics, and a masters degree in engineering in 1981 from the Helsinki University of Technology.

Ollila joined Nokia to work in its finance department in 1985 after working for Citibank Corp. for seven years.

One of his first assignments at Nokia was to broaden the company's ownership base abroad by handling a directed share sale to billionaire George Soros.

In 1990, Ollila became the head of Nokia's mobile-phone unit, which at the time accounted for 10 percent of the company's sales. He was named CEO two years later when Nokia was suffering from a sales slump related to the break-up of the Soviet Union and a recession in Finland. At the time, newspapers speculated that Ollila, a finance expert, was selected CEO to sell the company unit by unit. Ericsson was mentioned as a buyer for the wireless business.

Instead, Ollila saw the growth potential of the mobile-phone business and decided to focus on it while selling units such as television manufacturing and power cables.

In 10 years, Nokia had won almost 40 percent of the global handset market, surpassing rivals including Motorola and Ericsson. The biggest jump in the company's market share came in the later 1990s after Ollila reorganized the company's supply chain and other logistics operations, while also focusing on the design of the handsets instead of the technology that ran them. From the time Ollila took over at Nokia until mid-2000 the company's share price rose by more than 500 times. Since 2000, Nokia's sales have slowed as the handset market became saturated.