UPDATE 3-Fresh blow for Nokia as CTO ducks out

Thu Jun 9, 2011 5:53am EDT

* Report cites disagreements over MeeGo

* Company confirms his leave, no comment on details

* CEO says Nokia is not for sale

* S&P cuts rating, places on negative outlook

(Changes headline, adds analyst's comment)

By Ritsuko Ando

HELSINKI, June 9 (Reuters) - Nokia (NOK1V.HE) said its chief technology officer had taken a leave of absence and a Finnish newspaper said he was unlikely to return due to disagreements on strategy, a fresh blow for the struggling mobile phone company.

The Helsingin Sanomat quoted unnamed sources saying Richard Green was unhappy with management decisions such as abandoning the "MeeGo" operating system it was developing with Intel in favour of going with Microsoft's Windows Phone software.

Nokia confirmed Green had taken leave for personal matters and declined to comment on when he would return or on other details. Henry Tirri, head of Nokia Research Center, will be the acting CTO, a spokesman said.

The move comes as Nokia's once-undisputed leadership in mobile phones crumbles. The company is losing smartphone market share to Apple Inc's (AAPL.O) iPhone and Google Inc's (GOOG.O) Android devices and, at the low end, to cheaper Asian rivals.

Nokia's falling share price has triggered speculation it may be a takeover target, but bankers say Nokia is far from attracting real suitors due to scepticism about its recovery. [ID:nLDE757116]

Chief Executive Stephen Elop said on Thursday the rumours were "baseless" and the company was not for sale. [ID:nWLB6016]

Nokia is switching to Microsoft's Windows Phone software from its own Symbian platform later this year, as part of an overhaul of its phone business set out by Elop four months ago. [ID:nLDE71A0DG]

Elop's strategy transforms the company from a phone firm providing software and services to one which must focus on delivering the best possible hardware on which to run Microsoft's platform: a change of identity which investors are still absorbing even as they contemplate Microsoft's unproven Windows Phone platform.

Many analysts believe Nokia is losing market share so fast it may never recover. The company last week warned that second-quarter mobile phone sales would be substantially below a previous forecast. It also abandoned its full-year outlook, blaming tough competition in China and Europe.

"We will probably see more of these negative news for Nokia in the coming weeks. All the effects caused by the profit warning have not yet come through," said Nordea analyst Sami Sarkamies, adding that the report was no surprise.

On Thursday S&P cut its debt rating for Nokia to 'BBB+/A-2' and placed the company on CreditWatch with negative implications. That followed the decision by Fitch ratings agency on Tuesday to cut its rating on Nokia's bonds on Tuesday to 'BBB-' -- one notch above junk grade.

Fitch also set a negative outlook, saying consumers appear to be deserting its legacy handsets.

"I think that this ... will confirm to the most sceptical people that Nokia can never make a turnaround," John Strand, head of Strand Consult, said on Thursday. "The victim here is again the shareholder."

The handset maker's equity value has halved to 17 billion euros ($24.91 billion) since the leak in February of Elop's memo comparing Nokia to a man standing on a burning oil platform.

At 0941 GMT Nokia shares were up 0.2 percent at 4.30 euros.

($1=.6825 Euro) (Reporting by Helsinki Newsroom; Editing by Sophie Walker)

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