Chairman of struggling Ericsson to stand down
Leif Johansson, president of the Swedish Ericsson plans to leave before the company’s annual meeting in 2018, while the mobile device company struggled to recover profitability.
More expensive Chinese rivals expelled Ericsson as the largest player in the mobile device market, while its effort to increase revenue by expanding its customer base to include public services, transportation and media companies was An expensive failure.
Ericsson has developed a new CEO, but corporate investor Cevian capital, led by Christer Gardell, recently bought a stake of more than 5 percent and called for further changes.
“It is not reasonable to believe that (Gardell) Johansson pushed it out,” said a fund manager with an investment in Ericsson, but did not want to be identified.
“The company has to change and Johansson is not the man for change.”
Ericsson shares rose 1.1% at 0854 GMT, far exceeding the Stockholm index.
Johansson, 65, has given some clues as to why he chose to resign, and only said that the company had a new strategy and a new ownership structure.
“It is natural for the owners to propose a president and together before, I want to announce that I will not be available for an upcoming term,” he said in a statement.
Gardell could not be reached for comment.
Ericsson has struggled for years, struck by lower spending by telecom companies, rising competition from China’s Huawei and Nokia’s revolutionary. The global slowdown and the weakness of emerging markets have added to its difficulties.
The cost-cutting change has not been able to change things and the company fired its long-time CEO Hans Vestberg last summer when the patience of major shareholders like Inversor and Industrivärden was exhausted.
Ericsson’s shares have lost almost half of their value over the past two years and the company posted an operating loss of $ 12.3 billion ($ 1.45 billion) in the first quarter due to amortizations and restructuring costs, Its second quarterly loss in a row.
New CEO Borje Ekholm has promised to refocus the group on core network equipment sales.
However, some shareholders questioned the CEO of insider trading that had served on the board for years, while the Ericsson star was down.
Johansson, former CEO of cosmetic surgery-maker Volvo, has been president since 2011 and was seen by some in the past Ericsson, not his future.
Ceviano, which has already led to value-creating structural changes with blue chips such as Volvo truck maker and lender Swedbank, said it supports the Ekholm strategy but questioned its ability to run.