Nokia brings in Microsoft executive Stephen Elop to replace CEO

Elop, the head of Microsoft's business division, will take over from Olli-Pekka Kallasvuo, who Nokia has been looking to replace for several months, on September 21.

Shares in Nokia were up 5.8 percent and 8.175 euros at 073 GMT, outperforming the European technology index .SX8P which was up 0.98 percent.

"It is good that something is happening," said Inge Heydorn, fund manager at Sentat Asset Management.

"They have had problems for a long time and have been behind the curve on trends for the past few years. I think it could be good to get new influences, thoughts and ideas," Heydorn said.

Under Kallasvuo, who has spent more than half of his life at the company, Nokia has struggled to keep up with new rivals like Apple (AAPL.O) and Google (GOOG.O) in the smartphone market.

"Elop faces a daunting task. Nokia has lost its leadership in high tier phones and has struggled with the rise of Internet-led services. All eyes will be on what strategy he adopts to address this," said Ben Wood, head of research at CCS Insight.

Microsoft and Nokia are long-time collaborators, and in August last year formed an alliance to bring Office applications such as Outlook e-mail to Nokia devices.

The Finnish company has lacked a hit smartphone model since its 2006 launch of the N95, and has lost out in the top end of the market to Apple's iPhone.

"Nokia has a communication problem. There is no doubt that Stephen Elop is a better communicator than Kallasvuo," said John Strand, head of telecoms consultancy Strand Consult.

Elop, who joined Microsoft in 2008 from Juniper Networks (JNPR.N), was credited with successfully managing the launch of Microsoft's Office 2010 suite of applications earlier this year.

Elop helped steer the company toward online versions of programs such as Word, Outlook and Excel which users could access from anywhere and even use on mobile devices, a relatively major advance for Microsoft, whose fortune has been founded on installed software.

"His strong software background and proven record in change management will be valuable assets as we press harder to complete the transformation of the company," chairman Jorma Ollila said on Friday.

Nokia said Kallasvuo would get a severance payment of 4.6 million euros ($5.84 million).