Nokia CEO Pekka Lundmark is making his mark on the challenged Finnish company less than three months after taking the helm. He announced a company-wide restructuring and shift in strategy designed to revitalize the vendor’s 5G radio access network (RAN) business and strengthen its position against rival Ericsson. 

Lundmark has some clean-up work to do, including decisive actions against complacency, as he described it in his first week on the job. Although he previously held multiple executive roles at Nokia from 1990 to 2000, Lundmark hasn’t worked at a telecommunications company since then, and his outsider perspective appears to be freeing him to make quick, impactful decisions.

Nokia is no stranger to tumult and it has a poor track record of adapting to market changes. It commanded about 50% of the mobile phone business in 2007, and almost collapsed in 2013. The challenges Nokia faces today aren’t as profound as those it confronted a decade ago, but its business is shrinking and company stock dove 18.5% following its latest reorganization plans and third quarter of 2020 results. 

Lundmark described his vision as a three-part strategy, the first of which was shared today and that will take effect on January 1, 2021. Under his leadership, Nokia said it will abandon “end-to-end as a core strategic idea,” eliminating an overhyped industry phase that Nokia’s previous CEO Rajeev Suri used often to justify the company’s acquisition of Alcatel-Lucent in 2016 and adopted at large. 

That $16.6 billion deal continues to be a sore spot for the company, and appears to have played a role in Nokia’s lagging position on chipsets. Nokia slashed its 5G outlook following its Q3 2019 results and admitted to weakness in its system-on-a-chip (SoC) based 5G hardware. Nokia previously said its second-generation RAN gear, with a new SoC, won’t reach all of its 5G products until the end of 2022.

Lundmark’s plan calls for Nokia to be reorganized under four business groups: Mobile Networks, IP and Fixed Networks, Cloud and Network Services, and Nokia Technologies. The company said it will share more details about its strategy on December 16, but also indicated that it intends to create more network-as-a-service business models and embrace more focused approaches instead of the “end-to-end” pursuits that don’t typically fall in line with its customers increasingly mixed strategies and network architectures. 

Nokia said its largest business, Mobile Networks, will target key technologies in 5G, open RAN, and virtualized RAN. That business unit generated $4.8 billion in revenue, a 13% year-over-year decline, during Q3. Compared to the year-ago period, revenue from Nokia’s second and third-largest businesses, software and technologies, declined 14% and 7%, respectively. 

Lundmark highlighted Nokia’s Q3 profits of $237 million, up from $101.5 million a year ago, but noted that he expects choppier waters ahead. “When I look ahead,” he said in a statement, “the good progress we have made is not enough. Our financial performance in 2021 is expected to be challenging, and more change is needed.”

He committed to increased investments in research and development, claiming Nokia “will invest whatever it takes to win in 5G,” but that doesn’t show up in the numbers, at least not yet. The company reported that its full-year capex for 2020 will hit $583.7 million, which marks a 9% drop from its previous guidance.

Nokia reported a 7% year-over-year decline in revenue of $6.18 billion during Q3 and it declined to provide guidance, describing the exercise as “premature” amid a major reorganization. The company said it will provide a long-term outlook during its annual investors event on March 18, 2021. Nokia ended the quarter with 101 commercial 5G deals and 36 live network deployments.