Ericsson Picks New CEO

Ericsson Picks A New CEO

Ericsson has picked the former CEO of high-flying mining gear maker Atlas Copco as its new chairman, increasing hopes of a recovery as it battles against a slump in business.

Ronnie Leten will become chairman next year if other shareholders approve the plan at the annual meeting on March 28 next year, replacing Leif Johansson, the former chief executive of Volvo Group, who is leaving after criticism from an activist investor.

Mr Leten, who retired this year as chief executive of Atlas Copco after quadrupling its share price in his eight years in office, will step down as chairman of consumer appliances maker Electrolux in 2018 to make room for Ericsson. He is also due to become chairman of Epiroc, the mining business that Atlas Copco is spinning off next year.

“Ronnie Leten has a very strong track record when it comes to value creation . . . He has significant experience from digitalization of major operations,” said Johan Forssell, the head of Ericsson’s nomination committee and chief executive of the Wallenberg family’s investment vehicle, Investor.

Ericsson has been hit hard by competition from China’s Huawei and Finland’s Nokia as well as weak emerging markets and falling spending by telecoms operators, with demand for next-generation 5G technology still years away.

Analysts and rival executives think it may have to cut tens of thousands of jobs in a bid to win back competitiveness. A former senior executive at Nokia said: “They have just lost their way, taken their eye off the ball. They need to get rid of a lot of people.”

Earlier this year, it drafted in Borje Ekholm as its new CEO, but activist investor Cevian Capital, which has bought a more than 5-percent stake, has been pushing for further change.

Cevian Managing Partner Christer Gardell welcomed the choice of Leten, a 60-year old Belgian who stepped down as CEO of Atlas Copco earlier this year.

“He has an outstanding track record as value creator,” said Gardell.

Gardell was involved in forcing out Leif Johansson, former CEO of Volvo Group, after saying that “the board has done a very poor job”.

Shares in Ericsson rose as much as 2.2 percent on Monday after the news.

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