Ericsson AB
The Ericsson logo outside the companys headquarters

Top Shareholder Says Ericsson CEO Search is Main Priority

Oct. 19, 2016
The Swedish company has been without a CEO since Hans Vestberg was fired in July. Shareholder Investor AB wants a permanent solution in place.

Ericsson AB’s biggest shareholder is throwing its weight behind calls to find a new chief executive officer for the Swedish network-equipment maker as local media said recruitment efforts are faltering.

Ericsson, which has been run by its chief financial officer since Hans Vestberg was fired from the top job in July, has delivered its owners a series of blows in recent months. After shocking markets with a profit warning that wiped 20% off Ericsson’s value on a single day, the company must focus on finding the right candidate, someone with a long-term perspective, Johan Forssell, CEO of Investor AB, said on Wednesday.

“It needs to be a good leader, someone with strategic abilities, considering the large technology shifts that are happening in this industry,” Forssell said in an interview. “It’s also an advantage to have the ability to understand the technology.”

When Ericsson last week revealed a 14% slump in revenue and said savings plans aren’t enough to keep up with the bleak development in sales, the message was delivered by Jan Frykhammar, who’s been interim CEO since the board ousted Vestberg. The former CFO has said he doesn’t want to stay in the job permanently, but recruiters looking for a successor have yet to find someone ready and willing to take on the beleaguered Stockholm-based company.

“Uncertainty is never a good thing in a company,” Forssell said. “It’s important to find the right person at the right time. Obviously, you want that to happen as soon as possible but it’s even more important to find the right person.”

Swedish business daily Dagens industri reported Wednesday that several candidates have declined offers for the top position at Ericsson. By the end of last week, after Ericsson published some third-quarter results early, the company’s shares were trading at their lowest since 2008. It’s due to release full quarterly results Friday.

Ericsson is facing a tough demand situation, with added challenges from large technology shifts, Forssell said, adding that Investor AB will back up management until a new CEO is in place: “During this period it’s important for the board to support the interim CEO and the management in the important tasks that they have to handle,.”

Investor AB, the publicly-traded holding company of the Wallenberg family, has about 22% of the voting rights in Ericsson. Investor AB shares control of Ericsson with Industrivaerden AB, a Stockholm-listed holding company run by chairman billionaire Fredrik Lundberg.

By Niclas Rolander

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Licensed content from Bloomberg, copyright 2016.

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