Nokia appoints Oistamo to head Mobile Phones unit

HELSINKI (Reuters) - Finland's Nokia announced on Friday it has appointed Kai Oistamo to head its biggest division, Mobile Phones, as it fights to maximise the margins on its cheapest handsets in a cut-throat market.

Oistamo will replace Olli-Pekka Kallasvuo, who will become Nokia's president and chief operating officer on 1 October, the company said in a statement.

Kallasvuo takes over as Nokia chief executive next year from Jorma Ollila, who will step down to become part-time chairman.

Forty-year-old Oistamo is currently in charge of business line management at Mobile Phones, which makes Nokia's cheapest, mass-market handsets, a job he has held since January 2004.

"What he's brilliant at is operations," said Richard Windsor, analyst at Nomura Securities. "He's been able to sort out logistics and supply (in the division)."

Several analysts said they suspected Oistamo was Kallasvuo's choice to head the unit.

"The focus will be down to nuts and bolts, to squeeze every cent out of the entry-level products," said Mats Nystrom, of Enskila Securities.

"Few people would expect a major shift in strategy from them, but rather a really clear focus on costs."

The division faces a tough task in making decent returns from the cheaper phones on the market as they become increasingly commoditised and prices fall as Nokia chases share in emerging markets.

While Mobile Phones division achieved an operating margin of 19.2 percent in the first quarter, the second quarter saw it slide to just over 16 percent, with the outlook tough.

Iconic

Analysts say Nokia as a group still faces the challenge of finding truly market-beating designs to trump competitors like second-placed Motorola of the United States, which has had success with its ultra-thin RAZR phone.

"It still needs to come up with something...(truly) iconic, to capture the imagination of the market," Windsor said.

"That's something that's an issue for all the divisions, not just Mobile Phones."

Nokia also announced on Friday it had appointed Robert Andersson to lead Customer and Market Operations.

He currently occupies that role for Europe, the Middle East and Africa, having previously been in charge of Nokia's mobile phones business in the Asia Pacific region.

Yrjo Neuvo, 62, a senior vice president who is currently in charge of the company's future technology choices, will retire at the end of 2005, leaving the executive board on 1 October.