Nokia - Company Announcement

Nokia appoints Rajeev Suri as President and CEO and announces new strategy, program to optimize capital structure, and leadership team

Nokia Corporation
Stock exchange release
April 29, 2014 at 06:00 (CET+1)

Espoo, Finland - Having completed the sale of substantially all of its Devices& Services business to Microsoft on April 25, 2014, Nokia today announced the
following: 

  -- The appointment of Rajeev Suri as President and Chief Executive Officer,
     effective May 1, 2014;
  -- A vision to be a leader in technologies important in a connected world;
  -- A strategy to realize that vision by building on Nokia's three strong
     businesses in networks, location and technologies;
  -- Plans for a EUR 5 billion program to optimize its capital structure,
     including the Nokia Board's proposal to the Annual General Meeting 2014 for
     the dividend and for an authorization for the Board to repurchase shares;
     and
  -- A new governance structure and the appointment of a new leadership team,
     effective May 1, 2014.

New President and CEO

Nokia Board of Directors has appointed Rajeev Suri as President and CEO of
Nokia Corporation, effective May 1, 2014. Suri joined Nokia in 1995 and has
held a wide range of leadership positions in the company. Since October of
2009, he has served as CEO of NSN, the former joint venture between Nokia and
Siemens that is now fully owned by Nokia. During his tenure as CEO, that
business went through a radical transformation to become one of the leaders in
the telecommunications infrastructure industry. 

“As Nokia opens this new chapter, the Nokia Board and I are confident that
Rajeev is the right person to lead the company forward,” said Risto Siilasmaa,
Chairman of the Nokia Board of Directors. “He has a proven ability to create
strategic clarity, drive innovation and growth, ensure disciplined execution,
and deliver results. We believe that his passion for technology will help
ensure that Nokia continues to deliver innovations that have a positive impact
on people's lives.” 

Siilasmaa, who has also been serving as an interim CEO, will return to focusing
exclusively on his role as Chairman of Nokia's Board of Directors as of May 1,
2014. 

“I am honored to have been asked to take this role, and excited about the
possibilities that lie in our future,” said Rajeev Suri. “Nokia, with its deep
experience in connecting people and its three strong businesses, is
well-positioned to tap new opportunities during this time of technological
change. I look forward to working with the entire Nokia team as we embark on
this exciting journey.” 

Long-term leadership targeted in three key areas

Nokia believes that over the next 10 years billions of connected devices will
converge into intelligent and programmable systems that will have the potential
to improve lives in a vast number of areas: time and availability,
transportation and resource consumption, learning and work, health and
wellness, and many more. 

This new world of technology will require 1) connectivity capable of handling
massive numbers of devices and exponential increases in data traffic; 2)
location services that seamlessly bridge between the real and virtual worlds;
and 3) innovation, including in sensing, radio and low power technologies.
Nokia's vision is to be a leader over the long term in these three areas. 

“The world of technology is on the verge of a change that we believe will be as
profound as the creation of the internet” said Rajeev Suri. “With our three
strong businesses - Networks, HERE and Technologies - and position as one of
the world's largest software companies, we are well placed to meet our goal to
be a leader in the technologies for a world where everybody and everything is
connected.” 

Nokia strategy

“Nokia's strategy is to develop its three businesses in order to realize its
vision of being a technology leader in a connected world and, in turn, create
long-term shareholder value,” said Rajeev Suri. “Our goal is to optimize the
company so that each business is best enabled to meet its goals. Where it makes
sense to do so, we will pursue shared opportunities between the businesses, but
not at the expense of focus and discipline in each.” 

Nokia will target the creation of long-term shareholder value by focusing on
the following three areas: 

1) Through its Networks business (formerly Nokia Solutions and Networks, or
NSN), Nokia will invest in the innovative products and services needed by
telecoms operators to manage the increase in wireless data traffic which is
more than doubling every year. Future investment will focus on further building
on our strong position in mobile broadband and related services, and
strengthening our leadership position in next-generation network technologies. 

Today, the Networks business serves more than 90 of the world's 100 largest
operators, is a leader in the large and dynamic mobile broadband market, and is
ranked third in estimated global market share in mobile radio and second in
telecommunication services. An early leader in virtualization and cloud
technologies, Networks conducted trials and pre-commercial live projects with
more than 50 customers in 2013. “Customers of our Networks business can have confidence that we will continue
to make the investments necessary to deliver the innovation needed to help them
build even stronger businesses,” said Rajeev Suri. 

2) Through its HERE business, Nokia will invest to further develop its location
cloud to make it the leading source of location intelligence and experiences
across many different operating systems, platforms and screens. Given that
location is an essential element of a connected world, we will target our
investment in three areas: 1) technology for smart, connected cars; 2)
cloud-based services for personal mobility and location intelligence, including
for the growing segment of wearables and special purpose devices; and 3)
location-based analytics for better business decisions. 

Today, HERE is the leading global provider of map content, powering four out of
five in-car navigation systems. Its location platform is used by leading
internet companies such as Amazon, Microsoft and Yahoo. “Our view is that only
one other company has location services that come close to the depth and
breadth of those from HERE - and HERE has the advantage of being independent
from any operating system or single business model,” said Rajeev Suri. 

3) Through its Technologies business, Nokia will invest in the further
development of its industry-leading innovation portfolio. This will include 1)
expanding our successful intellectual property licensing program; 2) helping
other companies and organizations benefit from our breakthrough innovations
through technology licensing; and 3) exploring new technologies for use in
potential future products and services. 

The Technologies team includes hundreds of world-class scientists and engineers
who have driven more than half of Nokia's recent patent filings and many of
whom are recognized as leading experts in fields that are essential for
enabling the future connected world.  These areas include low-power connected
smart multi-sensor systems, distributed sensing, and intelligent interplay
between various types of radio technologies. 

“Nokia's industry leading intellectual property has the potential to create
significant value for our licensees and our shareholders,” said Rajeev Suri.
“With the strength of our Technologies team and continuing investment in
advanced research and development, we can also drive new opportunities for
Nokia in both business-to-business and consumer markets.” 

Nokia's continuing businesses invested more than EUR 2.5 billion in research
and development in 2013. We believe that the company has a strong financial
position and the capacity to continue to make the investments necessary to
remain an innovation leader in the three segments in which it competes. 

Planned EUR 5 billion capital structure optimization program

As a result of the closing of the transaction between Nokia and Microsoft,
Nokia's financial position and earnings profile have both improved
significantly. Furthermore, Nokia's Board of Directors has conducted a thorough
analysis of Nokia's potential capital structure requirements. Based on this
analysis, the Nokia Board is confident that Nokia has the financial strength
and flexibility to sustain the long-term investments necessary to ensure
industry leadership in the future. 

To improve the efficiency of Nokia's capital structure, the Nokia Board is
today announcing plans for a EUR 5 billion capital structure optimization
program which focuses on recommencing ordinary dividends, distributing deemed
excess capital to shareholders, and reducing interest bearing debt. This
comprehensive program consists of the following components: 

  -- Recommencement of ordinary dividend payments, with at least EUR 800 million
     of ordinary dividends in total planned for 2013 and 2014, as follows:
     -- An ordinary dividend for 2013 of EUR 0.11 per share (approximately EUR
        400 million), subject to shareholder approval in 2014; and
     -- A planned ordinary dividend for 2014 of at least EUR 0.11 per share (at
        least approximately EUR 400 million), subject to shareholder approval in
        2015;
  -- A special dividend of EUR 0.26 per share, subject to shareholder approval
     in 2014 (approximately EUR 1 billion);
  -- A EUR 1.25 billion share repurchase program, subject to the authorization
     to the Board by the shareholders in 2014; and
  -- Debt reduction of approximately EUR 2 billion by the end of the second
     quarter 2016.

“We are committed to effective deployment of capital to drive future value
creation,” said Timo Ihamuotila, who is currently Nokia's Chief Financial
Officer and who has been appointed to serve as the Group Chief Financial
Officer as of May 1, 2014. “We believe our planned comprehensive EUR 5 billion
capital structure optimization program enables Nokia to make quick and orderly
progress towards a more efficient capital structure, and is aligned with the
long-term interests of our customers and shareholders. Together with our
continued focus on solid business execution, these capital structure
enhancements support our longer-term target to return to an investment grade
credit rating, which would further affirm our long-term competitive strength
and support our strategic objectives.” 

Ordinary Dividends - at least EUR 800 million in total for 2013 and 2014

As part of the overall capital structure optimization program, Nokia Board of
Directors proposes to the Annual General Meeting, scheduled to take place on
June 17, 2014 (Annual General Meeting 2014), the recommencement of ordinary
dividend payments to shareholders. The Nokia Board proposes to the Annual
General Meeting 2014 that a dividend of EUR 0.11 per share be paid with respect
to the year 2013, which equals approximately half of Nokia's non-IFRS earnings
from continuing operations in 2013. This ordinary dividend for 2013 is expected
to be paid on or about July 3, 2014. 

Furthermore, the Nokia Board plans to propose an ordinary dividend of at least
EUR 0.11 per share with respect to the year 2014 to the Annual General Meeting
convening in spring 2015. 

Special Dividend and Share Repurchase Program - EUR 2.25 billion in total

The Nokia Board of Directors proposes to the Annual General Meeting 2014 a
special dividend of EUR 0.26 per share (approximately EUR 1 billion). The
special dividend is expected to be paid on or about July 3, 2014. 

The Nokia Board also proposes a share repurchase authorization to facilitate
the EUR 1.25 billion of planned share repurchases over two years. The Nokia
Board proposes that the Annual General Meeting 2014 authorize the Board to
resolve to repurchase a maximum of 370 million Nokia shares, which corresponds
to less than 10% of Nokia shares outstanding. The term of the repurchase
authorization is for the maximum of 18 months under Finnish regulations, and is
expected to be re-proposed by the Nokia Board at the Annual General Meeting
2015. The repurchased shares are expected to be cancelled. The shares may be
repurchased in the open market, in privately negotiated transactions, through
the use of derivative instruments, or through a tender offer made to all
shareholders on equal terms. The share repurchase authorization would be
effective until December 17, 2015 and terminate the current authorization
granted by the Annual General Meeting on May 7, 2013. The Nokia Board plans to
commence the repurchases following the publication of the Company's interim
report for the second quarter of 2014. 

Debt reduction program - EUR 2 billion in total

In addition, Nokia plans to reduce interest bearing debt by approximately EUR 2
billion by the end of the second quarter 2016. Once complete, the debt
reduction is expected to result in annual run rate savings of at least EUR 100
million related to recurring interest costs. Furthermore, lowering our gross
debt level is aligned with our target to return to being an investment grade
company. Nokia intends to reduce interest bearing debt by utilizing applicable
maturity dates, call dates, or other terms allowing early redemption or
retirement of debt or by making offers to repurchase debt in the open market. 

Nokia ended the first quarter 2014 with a strong balance sheet and solid cash
position with gross cash of EUR 6.9 billion and net cash of EUR 2.1 billion
compared to EUR 9.0 billion and EUR 2.3 billion, respectively, at the end of
the fourth quarter 2013. The sequential decline in Nokia's gross cash was
primarily due to repayment of certain debt facilities totalling approximately
EUR 1.8 billion during the first quarter 2014. If the transaction to sell
Microsoft substantially all of our Devices & Services business would have
closed before the end of the first quarter 2014, Nokia would have ended the
quarter with gross cash of approximately EUR 10.5 billion and net cash of
approximately EUR 7.1 billion. 

Clear operational governance and structure; strong leadership team

Nokia will adopt a simple and clear operational governance model, designed to
facilitate innovation and growth. As of May 1, 2014, all three businesses will
report to the Nokia President and CEO, who has full accountability for the
performance of the company. HERE and Technologies each will have a single
leader reporting to the President and CEO. To ensure efficiency and simplicity,
the Nokia President and CEO will assume direct control of the Networks business
and key Networks leaders will report to him. 

The primary operative decision-making body for the company will be the Nokia
Group Leadership Team, which will be responsible for Group level matters,
including the company strategy and overall business portfolio. Effective May 1
2014, the Nokia Group Leadership Team will replace the current Nokia Leadership
Team, and the President and CEO will chair the Group Leadership Team, which
will consist of the following members: 

  -- Rajeev Suri as President and CEO of Nokia.
  -- Timo Ihamuotila as Executive Vice President and Group Chief Financial
     Officer.
  -- Michael Halbherr as CEO of HERE.
  -- Henry Tirri as Executive Vice President, and acting Head of Technologies.
  -- Samih Elhage as Executive Vice President and Chief Financial and Operating
     Officer of Networks.

The current Nokia Leadership Team will be disbanded. On April 25, 2014, Stephen
Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber stepped down
from the Nokia Leadership Team and transferred to Microsoft. In addition,
Louise Pentland, Juha Äkräs and Kai Öistämö will step down from the Nokia
Leadership Team effective May 1, 2014 and leave the company to pursue
opportunities outside of Nokia. Pentland, Äkräs and Öistämö will continue to
serve Nokia in an advisory role during a transition period. Of the current
Nokia Leadership Team members, Timo Ihamuotila, Michael Halbherr and Henry
Tirri will continue as members of the Group Leadership Team, as mentioned
above. 

With these leaders leaving the company, Nokia announces the appointment of
Hans-Jürgen Bill as Executive Vice President of Human Resources, Barry French
as Executive Vice President of Marketing and Corporate Affairs, and Maria
Varsellona as Executive Vice President and Chief Legal Officer, effective May
1, 2014. 

“Nokia has a strong and proven team of leaders,” said Rajeev Suri. “We intend
to move fast to further refine our execution plan, build the right company
culture, and institute the necessary operational governance and performance
management systems.” 

Effective May 1, the interim governance structure of Nokia will cease to exist.
 Risto Siilasmaa, who has been serving as an interim CEO since September 3,
2013, will focus exclusively on his role as the Chairman of the Nokia Board of
Directors. In addition, Timo Ihamuotila will step down from the interim
President position. 

Consistent with the planned structural changes announced today, Networks
(formerly Nokia Solutions and Networks, or NSN) and Technologies will operate
under the Nokia brand. HERE will retain its distinct identity within the Nokia
family and, where appropriate, will be identified as “A Nokia Company”. The NSN
name will no longer be used after a short phase-out period.  For financial
reporting purposes, Nokia will have four reportable segments: Mobile Broadband
and Global Services within Networks, HERE, and Technologies. 

More information on the Nokia Leaders is available at: http://company.nokia.com.

Press conference

Nokia is to hold a press conference today at its Karaportti campus in Espoo,
Finland. The event is open to representatives of the media. 

Time: 10:30-11:30 (CET+1). Registration opens at 10:00.

Place: Karakaari 7, Espoo 02610. http://her.isb/UWyd6

For others wishing to view the press conference, we will be live-streaming the
event at the following link:
http://sites.media-server.com/mmc-custom-portals/nokia/2014-04-29_press-conferen
ce/index.php?p=wnkrw6rc 

Analyst conference call

Nokia is to hold a conference call for equity analysts today at 15:00 (CET+1).
A webcast of the conference call will be available at
http://company.nokia.com/financials. Media representatives wishing to listen in
may call +1 706 634 5012, conference ID 30453654. 


FORWARD LOOKING STATEMENTS

It should be noted that Nokia and its business are exposed to various risks and
uncertainties and certain statements herein that are not historical facts are
forward-looking statements, including, without limitation, those regarding: A)
expectations, plans or benefits related to Nokia's new strategy; B)
expectations, plans or benefits related to future performance of Nokia's
continuing businesses Networks, HERE and Technologies; C) expectations, plans
or benefits related to changes in leadership and operational structure; D)
expectations regarding market developments, general economic conditions and
structural changes; E) expectations and targets regarding performance,
including those related to market share, prices, net sales and margins; F) the
timing of the deliveries of our products and services; G) expectations and
targets regarding our financial performance, cost savings and competitiveness
as well as results of operations; H) expectations and targets regarding
collaboration and partnering arrangements; I) the outcome of pending and
threatened litigation, disputes, regulatory proceedings or investigations by
authorities; J) expectations regarding restructurings, investments, uses of
proceeds from transactions, acquisitions and divestments and our ability to
achieve the financial and operational targets set in connection with any such
restructurings, investments, divestments and acquisitions, including any
expectations, plans or benefits related to or caused by the transaction
announced on September 3, 2013 where Nokia sold substantially all of Nokia's
Devices & Services business to Microsoft on April 25, 2014 (“Sale of the D&S
Business”); K) statements preceded by or including "believe,""expect,""anticipate,""foresee,""sees,""target,""estimate,""designed,""aim","plans,""intends,""focus", “continue”, “project”, “should”, "will" or similar
expressions. These statements are based on management's best assumptions and
beliefs in light of the information currently available to it. Because they
involve risks and uncertainties, actual results may differ materially from the
results that we currently expect. Factors, including risks and uncertainties
that could cause these differences include, but are not limited to: 1) our
ability to execute our new strategy successfully and in a timely manner, and
our ability to successfully adjust our operations; 2) our ability to sustain or
improve the operational and financial performance of our continuing businesses
and correctly identify business opportunities or successfully pursue new
business opportunities; 3) our ability to execute Networks' strategy and
effectively, profitably and timely adapt its business and operations to the
increasingly diverse needs of its customers and technological developments; 4)
our ability within our Networks business to effectively and profitably invest
in and timely introduce new competitive high-quality products, services,
upgrades and technologies; 5) our ability to invent new relevant technologies,
products and services, to develop and maintain our intellectual property
portfolio and to maintain the existing sources of intellectual property related
revenue and establish new such sources; 6) our ability to protect numerous
patented standardized or proprietary technologies from third-party infringement
or actions to invalidate the intellectual property rights of these
technologies; 7) our ability within our HERE business to maintain current
sources of revenue, historically derived mainly from the automotive industry,
create new sources of revenue, establish a successful location-based platform
and extend our location-based services across devices and operating systems; 8)
effects of impairments or charges to carrying values of assets, including
goodwill, or liabilities; 9) our dependence on the development of the mobile
and communications industry in numerous diverse markets, as well as on general
economic conditions globally and regionally; 10) our Networks business'
dependence on a limited number of customers and large, multi-year contracts;
11) our ability to retain, motivate, develop and recruit appropriately skilled
employees; 12) the potential complex tax issues and obligations we may face,
including the obligation to pay additional taxes in various jurisdictions and
our actual or anticipated performance, among other factors, could result in
allowances related to deferred tax assets; 13) our ability to manage our
manufacturing, service creation and delivery, and logistics efficiently and
without interruption, especially if the limited number of suppliers we depend
on fail to deliver sufficient quantities of fully functional products and
components or deliver timely services; 14) potential exposure to contingent
liabilities due to the Sale of the D&S Business and possibility that the
agreements we have entered into with Microsoft may have terms that prove to be
unfavorable to us; 15) any inefficiency, malfunction or disruption of a system
or network that our operations rely on or any impact of a possible
cybersecurity breach; 16) our ability to reach targeted results or improvements
by managing and improving our financial performance, cost savings and
competitiveness; 17) management of Networks' customer financing exposure; 18)
the performance of the parties we partner and collaborate with, and our ability
to achieve successful collaboration or partnering arrangements; 19) our ability
to protect the technologies, which we develop, license, use or intend to use
from claims that we have infringed third parties' intellectual property rights,
as well as, impact of possible licensing costs, restriction on our usage of
certain technologies, and litigation related to intellectual property rights;
20) the impact of regulatory, political or other developments on our operations
and sales in those various countries or regions where we do business; 21)
exchange rate fluctuations, particularly between the euro, which is our
reporting currency, and the US dollar, the Japanese yen and the Chinese yuan,
as well as certain other currencies; 22) our ability to successfully implement
planned transactions, such as acquisitions, divestments, mergers or joint
ventures, manage unexpected liabilities related thereto and achieve the
targeted benefits; 23) the impact of unfavorable outcome of litigation,
contract related disputes or allegations of health hazards associated with our
business, as well as the risk factors specified in the most recent Nokia's
annual report on Form 20-F in under Item 3D. “Risk Factors”. Other unknown or
unpredictable factors or underlying assumptions subsequently proven to be
incorrect could cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required. 

About Nokia

Nokia invests in technologies important in a world where billions of devices
are connected. We are focused on three businesses: network infrastructure
software, hardware and services, which we offer through Networks; location
intelligence, which we provide through HERE; and advanced technology
development and licensing, which we pursue through Technologies. Each of these
businesses is a leader in its respective field. http://company.nokia.com 

Media Enquiries:

Nokia
Communications
Tel. +358 (0) 10 448 4900
Email: press.services@nokia.com