(Bloomberg) — Nokia Oyj will replace Chief Executive Officer Pekka Lundmark with Intel Corp.’s recently appointed head of artificial intelligence Justin Hotard in a surprise announcement as the network equipment maker works to exit a prolonged slump in orders from phone operators.
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Lundmark, 61, will step down March 31 after more than four years in the role, and Hotard will take over the next day, the Espoo, Finland-based company said in a statement on Monday. The outgoing CEO will continue until the end of the year as an adviser to Hotard, 50.
Intel recruited Hotard just over a year ago from Hewlett Packard Enterprise Co. to lead its data center and AI group, bringing an outsider into a division that has been crucial to the chipmaker’s turnaround efforts. At Intel, he oversaw some of the company’s most important products, including the Xeon server processors that were once dominant in data centers but have lost share to rival offerings and in-house efforts by customers. He’s a US national, and will be based at Nokia’s headquarters in Espoo.
Hotard’s experience at Intel gives him expertise in a business Nokia’s hoped will spur growth. Nokia has in recent years struggled with low operator investment into the next generation 5G mobile gear and increasing competition, including losing out on a key AT&T Inc. contract worth $14 billion to Swedish rival Ericsson AB. Still, Lundmark said last month that the company was starting to see signs of growth in North America, a bellwether for telecom spending globally.
“Nokia’s CEO transition is a surprise given that Pekka Lundmark has been successful at ‘steadying the ship’,” analysts at JPMorgan Chase & Co. said in a note on Monday. “Given that a new CEO has already been appointed, it looks like this transition was in the works for some time. With the Datacenter and AI background of the new CEO, it is clear which areas Nokia wants to focus on.”
Nokia shares rose 2.4% to €4.77 at 2:54 p.m. in Helsinki on Monday. They have gained 43% in the past 12 months.
Hotard indicated he will stay the course, at first, in an interview with Bloomberg. Like his predecessor, he said he doesn’t have plans to cut prices in the mobile networks business in order to gain market share.
