Three months after giving former CEO Hans Vestberg his walking papers, Swedish equipment maker Ericsson has named Borje Ekholm as its new President and CEO effective Jan. 16, 2017.
Ekholm is a familiar name at Ericsson because he is a board member and is currently CEO of Patricia Industries, which is a division of Investor AB, a Swedish investment company that is Ericsson’s largest shareholder and controls more than 20 percent of its voting rights. Before heading up Patricia industries, Ekholm was the president and CEO of Investor AB for a decade.
During a call with investors to announce Ekholm’s appointment, Leif Johansson, chairman of the Ericsson’s board of directors, said that Jan Frykhammer, acting CEO, will remain in that role until Jan. 16. He also said that Ekholm will remain on the board after he takes over as CEO.
Johansson said that the Ekholm fit the board’s profile for what they wanted in a CEO because he is an engineer, has experience in the telecom and IT industries, and also is a good leader who can articulate a strategy.
Ekholm is a Swede but he will continue to live in the U.S. where he currently resides with his family. Johansson said that while the position is based in Stockholm, the company agreed to Ekholm’s requirement to live in the U.S. and noted that the U.S. is a big market for the company. The fact that Ericsson picked a Swede is not surprising. The company has historically always had Swedes as its leaders.
During the call, Ekholm declined to provide any details about what he plans to do to get the company back on track. Instead he said that Ericsson needs to make adjustments to its cost structure before it can grow. “We must invest in certain parts and make strategic choices and make prioritizations,” he said.
Earlier this month the company reported its first net loss in four years. Ericsson ended the third quarter with a 233 million Swedish kroner ($26.2 million) loss, compared with a net profit of 3.08 billion Swedish kroner ($345 million) in the same period last year.
The company also is about two years into a cost and efficiency program in which it has to reduce its annual run rate of operating expenses, excluding restructuring charges, to $5.94 billion.
Investors reacted somewhat favorably to Ericsson’s new CEO. In a research note, Raymond James said that there was value in appointing a long-time board member because he will be familiar with the company. However, it also said that he might be part of the problems that have plagued the equipment company and contributed to its current predicament.