Finnish telecommunications company Nokia (NOKIA.HE) announced on Monday that its current CEO, Pekka Lundmark, will step down, with Justin Hotard appointed as his successor. Hotard, who is currently the executive vice president and general manager of the Data Center & AI Group at Intel (INTC.O), will officially take on the role of Nokia’s CEO on April 1.
Telecom equipment manufacturers, including Nokia, have faced declining sales of 5G equipment and are looking to diversify into growing sectors like artificial intelligence (AI). Hotard’s extensive experience in AI and data centers makes him well-suited to lead Nokia’s next phase of growth. Nokia’s Chair Sari Baldauf praised Hotard’s track record of accelerating growth in tech companies and highlighted his expertise as key to Nokia’s future.
The announcement took the market by surprise, with JPMorgan analysts noting that Lundmark had been successful in stabilizing the company. However, they also recognized that the appointment of a new CEO indicated a shift in Nokia’s strategic direction, particularly with a focus on AI and data centers.
Analysts at Inderes echoed this view, noting the leadership change aligns with Nokia’s growing emphasis on its Network Infrastructure unit, which includes investments in AI and data centers. Last year, Nokia moved to acquire U.S. optical networking firm Infinera (INFN.O) in a $2.3 billion deal, aiming to capitalize on the expanding AI-driven data center market.
Lundmark, who has been CEO since 2020, will remain as an advisor to Hotard until the end of the year. The leadership transition had been in planning for some time, according to Nokia, after Lundmark expressed interest in moving on when the company’s repositioning efforts were more advanced.
Shares of Nokia rose 1.6% following the announcement, reflecting optimism about Hotard’s appointment. Despite a 27.85% increase in stock price over the past year, Nokia’s shares are still down more than 90% from their peak in June 2000.