Ericsson shareholders lose patience with CEO Vestberg amid diminishing earnings

Ericsson's two largest shareholders declined to comment on reports that they want to oust Hans Vestberg as CEO of the Sweden-based telecoms equipment vendor.

The reports emerged after the vendor reported a 26 per cent year-on-year drop in net income during the second quarter.

Shareholding companies Investor and Industrivärden are now aligned in their belief that Vestberg's six-year tenure at the helm of Ericsson should end, and are only holding off forcing the CEO out of the company because they are struggling to find a suitable replacement, Swedish business daily Dagens Industri reported.

Ericsson's two major shareholders were previously split on whether Vestberg should be replaced, but are now of the same mind on the matter, Dagens Industri stated.

However, the newspaper noted that Investor CEO Johan Forssell refused to comment on the reported search for a new Ericsson chief, and that Industrivärden issued a similar refusal when approached.

The report came after Ericsson announced that net income during the second quarter fell from SEK2.1 billion (€221 million/$244 million) in 2015 to SEK1.6 billion during the recent period, and sales fell 11 per cent year-on-year to SEK54.1 billion.

Vestberg said that "negative industry trends from the first quarter have intensified impacting demand for mobile broadband, especially in markets with a weak macro-economic environment", and announced that Ericsson's board approved a plan to step up an ongoing cost-saving programme.

That plan will see Ericsson reduce its R&D investment in IP and seek to boost efficiency from a new company structure that was implemented on Jul. 1, in a bid to cut operating expenses by SEK53 billion by 2017.

The talk of further cost savings sparked fears of mass job losses at the company, with trade unions predicting four-digit reductions in Ericsson's domestic workforce alone, The reported. Ericsson cut 3,800 jobs during the second quarter, the news agency noted.

For more:
- see this Dagens Industri report (in Swedish)
- view Vestberg's comments
- see Ericsson's Q2 earnings report (PDF)
- read this The report

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