New Ericsson CEO in low-key start

By:
Alan Burkitt-Gray
Published on:

New CEO Börje Ekholm in quiet period as Ericsson prepares for full-year figures on 26 January

Börje Ekholm has started work this morning as president and CEO of Ericsson, replacing Hans Vestberg, but will make few comments for almost two weeks.

Ericsson confirmed to Global Telecoms Business that Ekholm’s first engagement will be when the company makes its fourth quarterly – and full-year – report on Thursday 26 January.

“He needs to prioritise employees and customers for the first weeks, and we are in a silent period,” an Ericsson official told GTB.

However Ekholm blogged on his first morning: “As a company and an industry we are going through a period of intense change. Our job is to ensure that Ericsson emerges as an even stronger leader, providing the industry and our customers with superior products, services and solutions.

“We will ensure that Ericsson remains at the forefront of technological development – across all parts of our portfolio and markets. Our task is to make our customers successful, which in turn will make us successful.”

Ekholm was appointed in October 2016, three months after Vestberg was dismissed by the board in July shortly after the company announced an 11% fall in sales. A week after Ericsson’s quarterly report, Huawei announced that its sales in the same period were up 40%. Even with adjustments for exchange rates, Ericsson’s sales were down 7%.

After shareholders had a few days to digest the implications, Hans Vestberg, CEO for seven years and an employee for 28, was dismissed first thing on a Monday morning.

The new boss was CEO of US-based Patricia Industries, part of Swedish firm Investor which owns a stake in Ericsson, where he has served since 2005. He has sat on the Ericsson board of directors for more than a decade.

Patricia Industries focuses on Investor’s long-term, active ownership and development of unlisted companies, including Mölnlycke Health Care. Parent company Investor is also a shareholder in Hutchison’s 3 Scandinavia, which owns Three in Denmark and Sweden.

As Ekholm takes office, the rest of the top management in Ericsson appears to be in flux. The management section of Ericsson’s website was returning “We're sorry but the page you are looking for does not exist” on 16 January.

However, Jan Frykhammar, the CFO who became acting CEO when Vestberg left, remains a member of the executive leadership team and from today is appointed executive vice president and advisor to the CEO. But he does not return to his previous CFO role. Carl Mellander remains acting CFO, a position he has held since Vestberg’s removal.

Ericsson said that Frykhammar will support Ekholm during a transition period and will focus on corporate governance and efficiency.

Ekholm said: “Ericsson has shaped an entire industry and led technology developments that have benefitted so many. Yet, we are only at the beginning of the mobility journey as we in coming years will see massive transformation across industries as 5G is introduced.”

The results on 26 January will give him an opportunity to say something about how Ericsson will address what is seen as a major challenge facing the company.

Ericsson shares, which were trading at up to 80 Swedish kronor in April 2016, are now around 53 kronor. That puts the company’s market cap at under $20 billion. Cisco, with which Ericsson has a joint venture for certain markets, is now worth more than $151 billion.