Ericsson CEO Hans Vestberg has been ousted by the board of directors after failing to turn around the company’s performance.
Chairman Leif Johansson said that in the “current environment” the board had decided a new leader was needed to drive the next phase in Ericsson’s development He praised Vestberg’s “instrumental” role in building relationships with key customers as well as his “leadership and energy.”
Vestberg will remain at the company’s disposal as he serves out his six month notice period.
The CFO Jan Frykhammar will take on the role while the search for a replacement is taking place, which will comprise both internal and external candidates.
Frykhammer confirmed to the Chairman of the Board that he does not wish to take on the role permanently. Carl Mellander, currently VP & Group Treasurer, will be acting CFO in the meantime.
Ericsson saw its share price fall 15 percent in a single day in April and it has languished at this lower level ever since.
In July, Ericsson forecast its third consecutive quarter of comparable sales declines. Sales as reported decreased by 11 percent year-on-year while sales, adjusted for comparable units and currency, decreased by 7 percent year-on-year.
Vestberg then announced a range of cost-cutting measures, including reduced investment in research and development into intellectual property.
A new company structure was implemented on 1 July to “accelerate strategy implementation, to mirror customer ways of working and increase end-to-end accountability for business owners”, according to Ericsson’s statement.
The board confirmed that they would continue implementing these cost reduction plans.
Vestberg said: "I have had 28 fantastic years at Ericsson, the last seven as CEO. As the industry enters a next phase, driven by 5G, IoT and Cloud, it is time for a new CEO to step in and continue the work to ensure Ericsson's industry leadership."
Ericsson’s share price rose almost 5 percent on the news.