Ericsson's largest shareholders unite on Vestberg departure — report - Mobile World Live

Ericsson’s largest shareholders unite on Vestberg departure — report

20 JUL 2016

Ericsson’s two largest shareholders are in agreement that beleaguered CEO Hans Vestberg must go, with yesterday’s disappointing Q2 results driving home the problems faced by the vendor, said Dagens Industri.

Discontent about Ericsson’s chief has been bubbling for some months (and a source told Mobile World Live at last month’s Mobile World Congress Shanghai that Vestberg’s job was under threat), but the report points to unanimity between Investor and Industrivarden, the two largest stockholders, about the need for new leadership.

Yesterday, the Swedish company reported an 11 per cent fall in net sales and a 26 per cent plunge in net income, and announced further cost cutting measures that will include redundancies.

In the past, Investor hesitated about replacing Vestberg, but has now hardened its stance, said the report. The two shareholders hold a combined 37 per cent of voting stock in the company (2015 figure).

However, the glitch is finding a replacement for Vestberg, not an easy thing to do given the challenges facing the infrastructure giant.

“The problem is that it can be difficult to find a suitable successor who would take the job. There are no internal candidates and external candidates may be discouraged by the situation in Ericsson,” said one source.

Suitable candidates include Anders Runevad, CEO of Vestas, the Danish firm that is one of the world’s leading wind turbine vendors, who was previously vice president of Sony Ericsson and Ericsson’s head of central and western Europe (there is no indication that he has actually been approached by Ericsson to take the top job).

The departure of Vestberg could be delayed until he has seen through the difficult cost cutting programme, including redundancies. That might provide a more appealing environment to attract a top candidate.

There is a precedent for such an approach within Ericsson. Carl-Henric Svanberg made a strong start as CEO in 2003 after predecessor Kurt Hellstrom delivered significant savings.

One observer pointed to a line in yesterday’s result announcement. “However, in light of market development, management has, with the support of the board of directors, initiated significant actions to further reduce cost.”

The quote indicates that management is only embarking on such a major course of action with the explicit support of the board, which is surprising, said the report, and reflects Vestberg’s diminished position.

Yesterday, in an interview with Mobile World Live, Ericsson CFO Jan Frykhammar declined to comment on speculation Vestberg’s position is under threat.

Author

Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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