"I have had 28 fantastic years at Ericsson, the last seven as CEO," said Vestberg on his departure. "As the industry enters a next phase, driven by 5G, IoT and Cloud, it is time for a new CEO to step in and continue the work to ensure Ericsson's industry leadership."
Jan Frykhammar (pictured), executive VP and CFO, will act as CEO until a new CEO is in office. The search process will comprise both internal and external candidates.
Jan Frykhammar joined Ericsson 1991, and has held various positions in finance and business control. In 2009, Frykhammar became executive vice president, CFO and head of group function finance, and before that he was head of business unit global services. He holds a Bachelor of Business Administration and Economics from the University of Uppsala, Sweden.
Carl Mellander, currently VP & group treasurer, will be appointed acting CFO with immediate effect and Hans Vestberg will be available to support the board and management during his term of notice of six months.
In a company briefing, Leif Johansson, chairman of the Ericsson board said that Frykhammar “does not want to be seen as a candidate to become a permanent CEO”.
“We also see during these difficult times in the industry that it’s important to find a replacement for Hans,” added Johansson.
He further explained that it was time to “refine and develop a new strategy” for the company as Ericsson needs to tackle the next generation of technology in 5G, IoT and Cloud services and return to growth. Johansson stressed that Vestberg’s departure would not affect the company.
He added that Frykhammar represents “an ideal situation, where we have someone running the group as strongly as is ever possible while at the same time the board identifies candidates and select a candidate for the situations ahead of us”.
"In the current environment and as the company accelerates its strategy execution, the board of directors has decided that the time is right for a new leader to drive the next phase in Ericsson's development," explained Johansson.
Earnings report
Ericsson recently revealed its earnings report for the second quarter on July 19, which revealed that sales declined by 11 per cent year-over-year, but only by seven per cent after adjusting for comparable units and currency. The company also presented an action plan to significantly reduce cost and adapt to the current market environment.
This is intended to restore Ericssson’s Global Services’ profitability. The company reported that its Networks business was impacted by lower sales and an increased share of coverage business with a lower hardware margin.
Operating expenses, excluding restructuring charges, have been reduced by SEK 2.1 billion to SEK 14.0 (16.1) billion year-on-year, mainly as a result of actions related to the global cost and efficiency program.
"The negative industry trends from the first quarter have intensified impacting demand for mobile broadband, especially in markets with a weak macro-economic environment," said Vestberg at the time of the second quarter earnings report. "We are delivering on ongoing cost reduction activities. However, in light of market development, management has, with the support of the Board of Directors, initiated significant actions to further reduce cost."
"As stated in the report the Board fully supports the cost reduction plans. In addition, the Board supports the company business strategy and new company structure," Johansson continued.
