Ericsson appoints new CEO, faces uphill battle to right ship
The Ericsson board of directors has appointed Börje Ekholm to be president and CEO of the company effective Jan. 16, 2017. Ekholm will also remain a member of the board.
“I am very pleased to announce the appointment of Börje Ekholm,” said Leif Johansson, chairman of the board at Ericsson. “He has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media. Having served on Ericsson’s board of directors for the past 10 years, Börje Ekholm has full understanding of the challenges and the opportunities Ericsson currently faces.”
Ekholm joins Ericsson from his current position as CEO of Patricia Industries, a division within Investor. Prior to assuming this position in 2015, Ekholm held the position as president and CEO of Investor AB between 2005 and 2015. Previous positions also include president of Investor Growth Capital, as well as positions with Novare Kapital AB and McKinsey & Co.
The news comes after months of uncertainty following previous CEO Hans Vestberg stepping down from his position. The departure was the result of declining sales, decreasing operating income and poor quarter-to-quarter performance.
Vestberg’s exit appeared to be no quick solution to the deeper problems within the company as more bad news followed in the months after his leaving. Shares of Ericsson tumbled more than 20% in August, after the company said it expects disappointing third-quarter results. Ericsson projected a 93% year-on-year drop in operating profit and a 14% decline in sales. The company also anticipated operating profit of roughly $577 million on sales of $5.8 billion as its East Asian telecom competitors gain ground on the 140-year-old company.
To reduce its loses, Ericsson cut 3,000 jobs in Sweden in October. The cherry on top came when the company was accused by Republican presidential nominee Donald Trump of paying former President Bill Clinton a speaking fee as part of an effort to protect its business in Iran from U.S. State Department sanctions.
Ekholm will have his work cut out for him to bring the company back to past heights and compete with new competitors. Johansson said in a comment on the resignation of Vestberg that the company ought to be looking at new revenue streams, in particular within cloud, the “internet of things” and “5G.” Ericsson has partnered with companies including AT&T to have a 5G network tested and deployed by mid-2017, much earlier than most expect a 5G network to become available.
“In the middle of a significant company transformation I am confident that Ericsson will benefit from Börje Ekholm’s world-class ability to forcefully execute on strategic direction and plans,” Johansson said. “Börje Ekholm brings years of experience from leading a publicly listed company with a strong track record of driving shareholder value.”
“I am very excited about this opportunity,” Ekholm said. “As the networks and applications become even more important in a 5G connected world, our customers and the industry look for continuous innovation. I look forward to joining the great team at Ericsson and work closely with existing and new customers around the world in shaping the future of our industry.”
Ekholm is a member of the board of directors for Telefonaktiebolaget LM, Ericsson, Alibaba, NASDAQ OMX Group and Trimble Navigation, as well as a member of the University Board of KTH Royal Institute of Technology.
Frykhammar will remain interim CEO until Jan. 16, 2017.