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Ericsson Names Top Team, Cuts Staff

Ray Le Maistre
11/27/2006
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Ericsson AB (Nasdaq: ERIC) won't be making many drastic changes in its executive team once it adopts its new organizational structure in January 2007, though the changes will result in the loss of between 300 and 400 jobs. (See Ericsson Unveils New Team.)

In September, Ericsson announced a corporate revamp around three new divisions –- Networks, Global Services, and Multimedia. (See Ericsson Revamps.)

Now CEO Carl-Henric Svanberg has settled on his key team of executives, a group that is little changed from the current crop. Two current management team members, Kurt Jofs (general manager) and Björn Olsson (deputy general manager), will head up the Networks division; Hans Vestberg retains his role as head of Global Services; and Jan Wäreby, currently Head of Sales and Marketing at device firm Sony Ericsson Mobile Communications , will join the executive team as head of the Multimedia division, as previously announced. (See Ericsson Names Multimedia Chief.)

Wäreby is the only new name at the top table, which will be reduced from 13 heads to 12, as there are two departures. Sivert Bergman, currently general manager of Broadband Networks, is retiring from Ericsson in 2007, and Torbjörn Nilsson announced late last week he is leaving his post as head of Strategy and Product Management. (See Eurobites: Alcatel Spews News.)

That role is being folded into a new group-wide role, Strategy and Operational Excellence, which will be headed by Joakim Westh, the current head of Operational Excellence.

The revamp at Ericsson has also caused a number of job overlaps within the new groups, and will result in the loss of between 300 and 400 support and administration jobs. Ericsson says it is seeking volunteers for voluntary redundancy.

The company has already laid off 1,600 this year following the October 2005 acquisition of Marconi. (See Ericsson Buys Bulk of Marconi.)

Ericsson is gearing up for a much changed competitive landscape in 2007, especially in the mobile infrastructure market, where its main challengers in GSM and UMTS infrastructure, Nokia Corp. (NYSE: NOK) and Siemens Communications Group , are about to form a joint venture to create a very strong second player. (See Nokia, Siemens Get OK From EC, There's a New Bully on the Block, and Nokia, Siemens Create Networks Giant.)

Ericsson will also have to contend with the merged Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU), which will benefit from Alcatel's GSM inroads in developing markets, Lucent's 3G breakthrough deal at Cingular Wireless , and the new business that the acquisition of Nortel Networks Ltd. 's 3G access infrastructure unit will bring. (See Bush Approves Alcatel Lucent, Alcatel Snags Nortel 3G Unit, and Alcatel, Lucent Face 3G Decision.)

Ericsson's advantage over those two rivals, though, is that its revamp marks the final step in its major acquisition integration process, following the Marconi takeover 13 months ago, while Nokia Siemens Networks and Alcatel Lucent are just taking their first major integration steps. (See Ericsson Plugs Marconi Progress.)

— Ray Le Maistre, International News Editor, Light Reading

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