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Long-serving board member to take over from Jan Frykhammar on 16 January.
Ericsson on Wednesday appointed long-serving board member Börje Ekholm as its new CEO.
Ekholm was first elected to the Swedish vendor’s board in 2006. From 2005-2015 he served as CEO of Swedish investment company Investor AB. He currently serves as CEO of Patricia Industries, a division within Investor that focuses primarily on acquiring and growing unlisted companies.
"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," said Ericsson chairman Leif Johansson, in a statement.
Ekholm’s appointment becomes effective on 16 January 2017. Until then, Jan Frykhammar will remain interim CEO.
"I am very excited about this opportunity. 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 working closely with existing and new customers around the world in shaping the future of our industry," Ekholm said.
It will also be Ekholm’s unenviable task to reverse Ericsson’s ailing fortunes.
Economic woes in Latin America, Russia, the Middle East and Sub-Saharan Africa have hit Ericsson hard in terms of network sales. Its problems have been compounded by slowing capacity upgrades in North America and Europe.
Last week, Ericsson reported a 14% year-on-year decline in third quarter revenue, driven by slumping sales of network equipment, which fell 19%. The poor performance saw Ericsson swing to a net loss of 200 million kronor (€20.55 million), from a year-earlier profit of SEK3.1 billion.
Ericsson’s woes are not limited to the third quarter, of course. In anticipation of slowing global demand for telco equipment, the company in 2014 initiated an aggressive cost-cutting programme, which aimed to reduce annual costs by SEK9 billion by 2017, with half of those savings coming from operating expenses.
After reporting lacklustre sales in the second quarter of this year, Ericsson on 19 July doubled its operating savings target. However, it proved too little, too late for Ekholm’s predecessor Hans Vestberg, who resigned a week later, with then-CFO Frykhammar stepping in as interim CEO.
There is a significant human cost of Ericsson’s troubles too. Shortly after its cost-cutting programme was first unveiled, the company warned it would shed 2,200 jobs worldwide. Earlier this month, Ericsson confirmed that a further 3,000 redundancies would be made in Sweden alone.
As Ericsson’s new CEO, it will be up to Ekholm to give employees and investors something to cheer about.
"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. "[He] brings years of experience from leading a publicly listed company with a strong track record of driving shareholder value."
