CFOÂ Jan Frykhammar to become CEO as search ramps up
After 28 years with Swedish telecommunications giant Ericsson, CEO Hans Vestberg, who has held that position for the past seven years, stepped down on July 25, effective immediately, according to the company.
For now, EVP and CFO Jan Frykhammar will take over the CEO spot as the company’s board conducts an executive search;Â Carl Mellander, currently VPÂ and group treasurer, is now the acting CFO.
Chairman of the Board Leif Johansson said: “Hans Vestberg has led the company for seven years through significant industry and company transformation. Hans has been instrumental in building strong relationships with key customers around the world and his leadership and energy have been an inspiration to employees and leaders across Ericsson. However, 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.”
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,’ [‘internet of things’] and cloud, it is time for a new CEO to step in and continue the work to ensure Ericsson’s industry leadership.”
Last week Vestberg told investors the negative trends that hurt financial performance during the first quarter intensified during the second quarter, leading to declines in the company’s sales and operating income.
Ericsson’s sales slipped 11% year-on-year during Q2, or 7% when adjusted for comparable units and currency fluctuations. The infrastructure giant sold $6.3 billion worth of products and services, reporting sales declines for all three of its business units: networks, global services and support solutions.
Despite its recent focus on cost control, Ericsson saw its operating margin slide nine basis points to 32.3%. Coupled with the decline in sales, the lower margin meant operating income fell 22% year-on-year to $326 million for the quarter.
Vestberg also said Ericsson plans to restore global services profitability primarily by rightsizing the service delivery operations.
Ericsson has been cutting jobs for several years as part of an effort to reduce costs, and the Q2 earnings report suggests that reports of more layoffs to come are likely to be on target.
“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 said.
Vestberg “will be available to support the board and management during his term of notice of six months,” according to Ericsson.
