Finnish telecom company Nokia on Monday announced that CEO Pekka Lundmark will step down, with industry veteran Justin Hotard set to take over the role.
Hotard, who currently leads Intel's Data Center & AI Group as executive vice president and general manager, will take over the position on April 1.
Telecom equipment manufacturers, facing a decline in 5G gear sales, are exploring new markets and expanding into emerging sectors like artificial intelligence.
“He has a strong track record of accelerating growth in technology companies along with vast expertise in AI and data centre markets, which are critical areas for Nokia's future growth,” Nokia's chair Sari Baldauf said in a statement.
At 0854 GMT (1424 IST), Nokia's shares rose 1.6 percent to 4.7 euros on Helsinki’s stock exchange, outpacing the market’s 0.45 percent gain.
JPMorgan analysts called the CEO change unexpected, crediting Lundmark for stabilising the company.
“Given that a new CEO has already been appointed, it looks like this transition was in the works for some time. With the Datacentre and AI background of the new CEO, it is clear which areas Nokia wants to focus on,” they said in a note.
This view was echoed by analysts at Inderes, who see the change as a strategic shift towards Nokia's Network Infrastructure unit, where data centres and AI investments are fostering new growth opportunities.
{{/usCountry}}This view was echoed by analysts at Inderes, who see the change as a strategic shift towards Nokia's Network Infrastructure unit, where data centres and AI investments are fostering new growth opportunities.
{{/usCountry}}Nokia announced a $2.3 billion deal last year to acquire U.S. optical networking firm Infinera, aiming to capitalise on rising AI-driven data centre investments.
Lundmark, who took over as CEO in 2020, will remain as an advisor to Hotard until the year’s end, the company said.
In September, Nokia declined media reports saying the company was looking for a new chief executive.
“The planning for this leadership transition was initiated when Pekka indicated to the Board that he would like to consider moving on from executive roles when the repositioning of the business was in a more advanced stage, and when the right successor had been identified,” Baldauf said.
Nokia shares have risen 27.85 percent in the past year but remain over 90 percent below their June 2000 peak. The company’s infrastructure division, incorporating AI, specialises in communication systems, including data centres, servers, and routers.
Meanwhile, its mobile networks unit focuses on mobile communication technologies, managing cell towers and advancing 5G services.
With Reuters inputs