After weeks of uncertainty, Ericsson today named its new CEO, Börje Ekholm, a longtime member of the company’s board of directors who hails from Investor, a major Swedish shareholder of Ericsson. Ekholm lives in the United States and will stay when he takes over as Ericsson’s CEO in January.
Ekholm “has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media,” said Ericsson Chairman of the Board Leif Johansson in a release. “Having served on Ericsson's Board of Directors for the past ten years, Börje Ekholm has full understanding of the challenges and the opportunities Ericsson currently faces.”
In a conference call with media to announce the appointment, Ekholm didn’t offer any insights into his plans for Ericsson, according to reports, noting only that he would likely invest more heavily in some areas of Ericsson’s business while withdrawing from others.
Ekholm’s name drew relatively guarded comments from investors, who noted that he’s a long-time Ericsson insider who might not be able to provide a grand vision and turnaround plan for the struggling network equipment maker. For the past year, Ekholm has headed Patricia Industries, a division of Sweden’s Investor AB, an investment company that is Ericsson’s largest shareholder with 20 of Ericsson’s voting rights.
"What speaks against him is that he has been on the board for 10 years," Swedish financial analyst Daniel Djurberg told Reuters.
Wall Street met Ekholm’s appointment without much interest; the company’s stock remained unchanged in early trading this morning at around $5 per share.
Interestingly, Ekholm’s residence in the United States became a sticking point in his negotiations with Ericsson’s board over taking control of the company. Ekholm told the Wall Street Journal that remaining in the United States was a “prerequisite” for him to become Ericsson’s CEO, acknowledging that it will be “odd” for him to run a company based in Stockholm that employs more than 100,000 people.
Moreover, Ekholm has his work cut out for him. Ericsson has suffered a precipitous decline in revenues during the past year or so, a situation that motivated the company’s board to oust CEO Hans Vestberg in July.
Further, Ericsson announced it would slash 3,000 jobs in Sweden as it continues to struggle in a brutal worldwide market. Shares of Ericsson continued to slide after the venerable gear vendor said waning sales in North America contributed to a $26 million quarterly loss.
Ericsson has struggled against fierce competition from Nokia and Huawei as wireless carriers across the globe slow their investments in LTE networks.