Nokia may replace CEO amid lack of iPhone killer: report

Mobile phone giant Nokia has launched a search to replace Chief Executive Officer Olli-Pekka Kallasvuo as it is losing ground to rivals such as Apple Inc. and Research in Motion (RIM) in the smartphone market, the Wall Street Journal reported.

Nokia, which said to have approached the heads of several U.S. technology companies for the post, will make a decision by the end of the month, the Journal said citing unidentified people familiar with the situation.

One of the candidates to replace Kallasvuo refused to accept the role after meeting Chairman Jorma Ollila as the position requires moving to Finland, the Journal said.

The key responsibility for Kallasvuo ‘s successor would be to convince investors that Nokia is capable of delivering devices that could compete with Apple’s iPhone, RIM’s BlackBerry and other smartphones running on Google Inc.’s Android operating software.

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Kallasvuo’s Tenure

During Kallasvuo’s tenure, Nokia merged its network operations with Munich-based Siemens AG to form Nokia Siemens Networks that has been said to be a drag on profit since the very beginning.

Another notable event in Kallasvuo’s tenure was the acquisition of U.S. map company Navteq Corp. for $8.1 billion to boost GPS services in Nokia’s handsets.

Though Nokia sells more cellphones than any other manufacturer, the Finnish company has been unable to develop a smartphone with the same kind of popularity as the iPhone that changed the industry with its thousands of applications.

Nokia’s last hit smartphone was the N95 model, launched a few months after Kallasvuo took over as CEO in 2006.

Margin Pressure

Nokia, which has about 40 percent market share of cell phones in use, has been cutting prices and sacrificing profits to defend its market share.

The company, though, has a strong market in Europe and developing countries like India, it sells mainly lower priced models in those regions thereby hurting its margins.

Nokia’s worries have intensified after Apple began shipping iPhones in June, 2007 and in the third quarter last year, Apple surpassed Nokia as the world's most profitable phone maker, according to Strategy Analytics.

Since then, Nokia have lost two thirds of their market value, while Cupertino, California-based Apple’s worth has doubled in the same period.

Weaker Earnings, New Software

Nokia posted weaker than expected earnings in the first quarter in April and reshuffled top management, replacing a key handset executive in May.

In mid-June, the company lowered its profit outlook, citing among other factors "the competitive environment, particularly at the high-end of the market."

Earlier, the company had aimed to roll out a new version of its main Symbian operating system in the second quarter, but now isn't expected to release the software until later this summer.

Nokia, meanwhile, has decided to adopt a separate operating system MeeGo to power its high-end smartphones. The software is co-developed with Intel Corp.

Nokia shares closed at $8.92 Monday on the NYSE. The shares were trading in the range of $8.00 - $16.00 for the past 52-weeks.