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October 20, 2016

Ericsson top shareholder piles on pressure to find new CEO

Swedish local reports say that recruitment efforts are waning.

By Hannah Williams

Ericsson’s biggest shareholder has lent support to calls for hunting a new chief executive officer for the Swedish network-equipment maker in the wake of reports of floundering recruitment efforts.

In July, the company fired Hans Vestberg from the top job after failing to turn around its performance.

Since then, the operations have been handled by its chief financial officer, Jan Frykhammar.

Jan Frykhammar, CFO Ericsson

Jan Frykhammar, CFO Ericsson

In recent months, Ericsson owners have been hit by a series of negative developments, including a profit warning that resulted in 20% decline in the company’s market value in a single session, Bloomberg reported.

Investor AB CEO Johan Forssel said that the company must concentrate on searching for the right candidate, someone with a long-term perspective.

Forssell said in an interview to the publication: “It needs to be a good leader, someone with strategic abilities, considering the large technology shifts that are happening in this industry.

“It’s also an advantage to have the ability to understand the technology.”

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Investor AB owns nearly 22% of the voting rights in Ericsson.

Reporting a 14% decline in revenue for the third quarter, Ericsson said that savings plans are not keeping pace with the fall in sales.

Frykhammar, who’s been interim CEO since the board ousted Vestberg, had delivered the message.

Frykhammar has said that recruiters are still looking for a CEO replacement and he doesn’t want to remain in the top job permanently.

Forssell said: “Uncertainty is never a good thing in a company.

“It’s important to find the right person at the right time. Obviously you want that to happen as soon as possible but it’s even more important to find the right person.”

A report by Swedish business daily Dagens industri said several candidates have rejected offers to take over as the new CEO of Ericsson.

Forssell said that the company is facing a deteriorating demand and changing technology landscape is resulting in increased challenges for it.

He said Investor AB will support the company’s management until a new CEO takes charge.

Forssell said: “During this period it’s important for the board to support the interim CEO and the management in the important tasks that they have to handle.”

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