Ericsson CEO Hans Vestberg is to step down from the role immediately, after revenues and profits plunged and a turnaround plan that saw 8,000 job cuts failed to deliver.
Vestberg had been CEO of Ericsson since 2010. The company’s chief financial officer Jan Frykhammar will take the reins of the company as interim CFO.
The company, which employs 1,600 people between Dublin and Athlone, said it has initiated a search for a new permanent CEO.
‘As the industry enters its 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’
– HANS VESTBERG, FORMER CEO, ERICSSON
“Hans has been instrumental in building strong relationships with key customers around the world, and his leadership and energy have been an inspiration to employees and leaders across Ericsson,” said the chairman of the board Leif Johansson.
“However, in the current environment and as the company accelerates its strategy execution, the Board of Directors has decided that the time is right for a new leader to drive the next phase in Ericsson’s development.”
Vestberg added: “I have had 28 fantastic years at Ericsson, the last seven as CEO. As the industry enters its 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 has initiated an action plan to significantly reduce cost and adapt to the current market environment.
“As stated in the report, the Board fully supports the cost reduction plans. In addition, the Board supports the company business strategy and new company structure,” Johansson said.
The company last week reported a slide in sales and a 24pc plunge in Q2 profits as it struggled to improve profitability.
Ericsson shares were up 2pc in afternoon trading. The stock had been down 40pc since hitting a seven-year peak in April 2015.
Ericsson had been benefiting from strong sales of 3G and 4G network equipment, but that demand has since tapered off.
The company is also facing stiff competition from Chinese network equipment makers, most notably from Huawei.
Ericsson Globe Stockholm image via Shutterstock