Ericsson initiated a search for a new CEO following the announcement on Monday that Hans Vestberg has stepped down from the top role at the Sweden-based vendor with immediate effect, although he will remain available to the company for a period of six months.
Jan Frykhammar, the current EVP and CFO, is to serve as CEO in the meantime while Carl Mellander has been appointed acting CFO.
Chairman Leif Johansson said the board of directors had decided that the "time is right" for a new leader to drive the next phase in Ericsson's development in the current environment, although it is far from certain who will take over from Vestberg.
"Jan has made it clear that he is not aspiring to permanently take on the CEO role. However, I am very pleased that he has accepted this assignment. Jan will secure continued strong execution and leadership in the current situation," Johansson said.
Vestberg's departure comes only days after reports said Investor and Industrivärden, Ericsson's two largest shareholders, wanted to oust him as CEO. The reports emerged after the vendor reported a 26 per cent year-on-year drop in net income during the second quarter.
Last week, Ericsson said 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 noted at the time 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 had approved a plan to accelerate 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 Local.se reported. Ericsson cut 3,800 jobs during the second quarter, the news agency noted.
Johansson noted that the board fully supports the cost reduction plan as well as the company business strategy and new company structure.
Ericsson has continued to struggle as operators in mature mobile markets have largely completed LTE build outs and are preparing to invest in 5G over the next several years.
Vestberg said: "I have had 28 fantastic years at Ericsson, the last seven as CEO. 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."
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