Ericsson Appoints Investor AB's Ekholm as New CEO

Beleaguered Swedish equipment vendor Ericsson has revealed that Börje Ekholm will become its new CEO in January, replacing acting CEO and CFO Jan Frykhammar in the leadership role.

The appointment signals the frustration of leading shareholders with Ericsson's recent failures. Ekholm is an acolyte of the Wallenberg family, one of Ericsson AB (Nasdaq: ERIC)'s biggest shareholders through its Investor AB investment firm, and currently works as CEO of Patricia Industries, which manages Investor AB's unlisted holdings.

He took up that role in May last year but previously worked for nearly ten years as Investor AB's head of new investments and president of investor growth capital, according to his LinkedIn profile.

Ericsson dispensed with the services of former CEO Hans Vestberg in July after a sequence of earnings disappointments and has since been looking for a replacement with the strategic vision needed to restore the company's fortunes.

Shares have tumbled amid profit warnings and a grim forecast of operating conditions over the next six to nine months, as some of Ericsson's biggest international customers tighten their belts and bring a halt to infrastructure spending. (See Ericsson Swings to First Net Loss in 4 Years.)

Competition from low-cost but increasingly innovative rivals in Asia, and particularly China's Huawei Technologies Co. Ltd. , has also hurt Ericsson in recent years. (See Is There No Stopping Huawei?)

The Swedish vendor has been trying to diversify its business into growth areas such as IP networking, cloud computing and software and IT, but sales in these areas still account for just a fifth of Ericsson's total and have failed to offset the broader malaise. A tie-up with IP equipment leader Cisco Systems Inc. (Nasdaq: CSCO), announced last year, also appears to have borne little fruit.

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Getting Ericsson back on track, then, will be a huge challenge for Ekholm, who comes to the CEO role with limited hands-on experience of the telecom sector.

While Ekholm has had a position on Ericsson's board of directors for the past ten years, his previous executive roles have largely been in finance and consulting and included tenures at Novare Kapital and McKinsey.

What Ericsson needs, however, is a leader with bold ideas, rather than a technology wonk, and Ekholm could bring a fresh perspective to the company and the task it is facing.

The market certainly appears to have reacted positively to the appointment, with Ericsson's share price up by 3% in morning trading in Stockholm.

Ekholm is set to take up his new role in January, when Frykhammar will stand down from the acting CEO role he has occupied since Vestberg's departure.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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