Nokia Corp - Focus On Electronics

FOCUS ON ELECTRONICS

Kari Kairamo took over as CEO in 1975 and shifted Nokia's focus from forest products to consumer electronics. He also began consolidating Nokia's Scandinavian operations in an effort to increase operations throughout the remainder of Europe. Two years later, Nokia acquired Oy Kymamo, which formed the core of the firm's sixth operating unit, Nokia Plastics. The company's first foray into telecommunications came in 1981, when it purchased a 51-percent stake in Finland's state-owned telecommunications company, which was eventually renamed Telenokia. It was then that Finland began developing its cellular system, which developed into the world's most heavily trafficked cellular network, a major factor in Nokia's rise to dominance in the cellular phone industry. The following year, Nokia designed a digital switching system for Finnish telephone companies and purchased Finnish mobile phone company Mobira, which gave the firm entrance to what would become an exploding mobile phone market. Nokia continued to expand its electronics holdings in 1984, acquiring Luxor, Sweden's state-owned electronics and computer firm, and an 18.3-percent stake in Salora, the second-largest manufacturer of televisions in Scandinavia. By then, Nokia had forged several original equipment manufacture deals, agreeing to manufacture electronic equipment under the brand names of other firms.

The later half of the 1980s was marked by the launch of the Nokia brand name when the firm began to manufacture Nokia mobile phones. In 1986, the largest electrical products wholesaler in Finland, Sahkoliikkeiden, was added to Nokia's growing list of holdings. Purchases the following year included German consumer electronics manufacturer Standard Elektrik Lorenz AG, Swiss cable manufacturer Mail-lefer, and a French manufacturer of consumer electronics, Oceanic. Nokia also listed its shares on the London stock exchange. Nokia became Scandinavia's largest information technology company in 1988 when it purchased the data systems division of Sweden-based Ericsson Group. The company also acquired Great Britain's Deeko PLC and Renucci SA of France. Tire producing operations were rolled into a new subsidiary, dubbed Nokia Tyres Ltd. Divestitures that year included paper pulp producer Metsa-Botnia Oy.

Reportedly feeling intense pressure to boost profit margins, Kairamo committed suicide in 1988. He was succeeded by Simo S. Vuorilehto. Mobile phone operations continued to grow as Nokia forged joint ventures to produce mobile phones in the United States with Tandy Corp., and in France with Matra. The following year, Nokia sold off the bulk of its conveyor belt, technical, and flooring operations interests, as well as a circuit board plant in Germany.

In 1990, Nokia agreed to merge its European soft-tissue paper operations with those of United States-based James River Corp. and Italy-based Ferruzzi Group. The firm also worked with the telephone authority in Moscow, Russia, to establish ATM there. Acquisitions included Finnish electrical equipment wholesaler Suomen Sahkotukku Oy and a 51-percent stake in NKF Holding NV, which owned the Dutch telecommunications and cable manufacturer NFK Kabel. Cellular phone assets grew in 1991 with the purchase of Britain's Technophone Ltd., a mobile phone manufacturer. Also that year, Nokia sold its Nokia Data unit, and Kymmene Corp. agreed to merge its chemical operations with Nokia. The firm purchased television manufacturer Finlux in 1992. By then, Nokia had grown into the leading corporation in Finland. The diversified giant also was the sixth-largest manufacturer of electrical cables in Europe, as well as a leading television maker. Nokia also was the world's top cable machinery and winter tires maker. However, despite the firm's impressive growth, it had lost $213 million over the previous two years. Jorma Ollila took over as CEO that year, and he refocused the company on telecommunications.