The search is on to replace former Ericsson president and CEO Hans Vestberg, who was ousted from his job July 25 after several quarters of poor earnings. Chief financial officer Jan Frykhammar is temporarily replacing Vestberg until a permanent candidate is found.
Many industry watchers say the company needs to pick an outsider to get it back on track. But Ericsson, which is based in Stockholm, has a traditionally hired Swedes for its chief executive. And many of its former leaders, like Vestberg, climbed Ericsson’s ladder for a number of years before reaching the top.
“I think there will be pressure for a transformational player, says Ken Rehbehn, an analyst with 451 Research.
John Byrne, analyst with Current Analysis, believes Ericsson’s board of directors will look at candidates outside the company. “This could be a former telco CEO or even someone from outside telecom entirely,” he says.
Byrne also says the company may want to make a statement in the market by hiring a non-Swede. “This has never happened before,” he says. “And I’m not sure non-Swedish candidates would be anxious to jump into a situation where a majority of the board positions and 60 percent of the voting rights are held by Swedish institutions and individuals. But for the long-term health of the company I think it is something to consider.”
Ericsson’s board is populated by several Swedish executives including Chairman Leif Johansson who is also chairman of the International Advisory Board of the Nobel Foundation and is the former president and CEO of AB Volvo. Other members include Helena Sternholm, the president and CEO of AB Industrivärden, and Nora Denzel, the former interim CEO of Outerwall and the former SVP and general manager of QuickBooks Payroll Division.
Interestingly, one familiar name on Ericsson’s board is Kris Rinne, formerly the senior vice president, Network Technology, Network Architecture & Planning at AT&T and the former CTO of Cingular Wireless. Rinne, who retired from AT&T in late 2014, was instrumental in building and implementing AT&T’s LTE network in the U.S.
Vestberg replaced Carl-Henric Svanberg in 2009. Svanberg had been at the Swedish company since 2003. Prior to Vestberg, Ericsson’s president and CEO was Kurt Hellstrom.
Byrne also says that the involuntary departure of Vestberg most likely signaled to customers and investors that both strategy and execution had been lacking prior to the change. He also notes that Ericsson has been in a constant cost-cutting mode for about five years. That was necessary for it to remain competitive with other infrastructure companies, particularly Huawei.