488 — Ericsson appoints new CEO to twist sales slump

Feb 10, 2003 | Conteúdos Em Ingles

Carl-Henric Svanberg, one of Sweden‘s most successful executives is to take over as CEO of wilting equipment supplier LM Ericsson Telefon AB in an attempt to turn around a company whose continuing losses put its long-term survival in doubt.

Svanberg, who is credited with turning Assa Abloy AB into one of the world’s most successful lock companies, will become CEO in April, replacing Kurt Hellstrom, who joins a lengthening list of CEOs who have failed to turn Ericsson into a profitable operation.

Ericsson’s chairman, Michael Treschow said that Hellstrom decided to retire because he reached 60, but, according to Computerwire, behind the move is the hidden hand of the Wallenberg family, holding substantial shareholdings in many Swedish largest companies, including Ericsson and Assa Abloy. “Normally, they prefer to promote from within a company, and a decision to bring in an outsider is an indicator of the depths of their concern for Ericsson’s future,” Computerwire says.

Carl-Henric Svanberg, new CEO of EricssonWhen Ericsson revealed its full-year figures last week, CEO Hellstrom said that the market was likely to be at the lower end of company’s predicted flat to down 10 per cent range. Ericsson reported a loss for the year of 2,150 million euros, down from a loss of 2,450 million euros on revenue that fell 30.8 per cent to 16,800 million euros.

Hellstrom, who has been at Ericsson for 19 years, said the first 16 of these had been positive, but his last three years as chief executive officer had been very hard work, forcing him to take a number of “negative actions”, which had tired him.

He oversaw a huge restructuring programme at Ericsson due to the significant downturn in the industry that has seen the workforce reduced to 47,000 from a high of nearly 70,000 two years ago.

Computerwire and Electronics Times