Displaying items by tag: Hans Vestberg
Ericsson’s new CEO insists the company will emerge stronger under his leadership, despite a tough road aheadWritten on Tuesday, 17 January 2017 07:44
Ericsson’s newly appointed CEO, Borje Ekholm, has pledged to guide the beleaguered company through what he has labeled a “period of intense change”. The Swedish telecoms giant has endured some major setbacks, and was forced to lay off more than 3,000 of its Swedish staff last year. What’s more, the company has been forced to fight off bribery allegations after former executives of Ericsson told the US Securities and Exchange Commission (SEC) that they had engaged in multiple counts of bribery in different regions all over the world in an effort to secure major contracts.
However, incoming Borje Ekholm has insisted that under his tenure the company will come through this intensely difficult period, and will emerge as an “even stronger leader” in the industry. In a statement, Ekholm pointed to Ericsson’s position in the development of 5G as a reason to be optimistic for the future, and reiterated his desire to return the company to success.
Ekholm said: “As a company and an industry we are going through a period of intense change. Our job is to ensure that Ericsson emerges as an even stronger leader, providing the industry and our customers with superior products, services and solutions. We will ensure that Ericsson remains at the forefront of technological development – across all parts of our portfolio and markets. Our task is to make our customers successful, which in turn will make us successful.”
In addition to the 3,000 job losses in Sweden, Ericsson was also forced to lay-off over 1,000 of its staff in Italy. Ekholm’s appointment brings an end to the six month tenure of interim boss Jan Frykhammar, who took over following the resignation of long-term CEO Hans Vestberg in July last year.
To coincide with Ekholm’s first day as CEO, Ericsson announced it had signed a deal with Vodafone Hutchinson Australia (VHA) with hardware and software to virtualize the operator’s core and IP network. The collaboration between the two is a result of its high-profile Cisco partnership and Ericsson believes it represents the first time the two companies have worked together on telecoms cloud infrastructure for an operator.
VHA CTO Kevin Millroy said the new infrastructure “opens the door to new business models and markets,” citing the development of Internet of Things technologies as a particular aim for the company.
But this is just a small taste of success for a company facing a tough road ahead. Ekholm is a long-time board member at Ericsson, and is taking on the role of CEO at a time when the company saw its share price plummet 35 percent last year amidst steep revenue declines, competition from Chinese competitors, and a slowdown in carrier spending as large investments in fourth-generation wireless gear vastly wound down.
Industrivarden AB and Investor, Ericsson’s two largest investors, pushed former CEO Hans Vestberg out of the company last year after he failed to predict the company’s downturn, missed financial targets, and didn’t react sufficiently to a collapsing market.
Caretaker CEO Frykhammar has done his best to cut costs, but hasn’t offered much clarity for the future of the company. That leaves Ekholm to lead Ericsson to a brighter future. There is hope, seeing as Ekholm once led Investor, the Wallenberg family’s investment company, during a 10-year period when the stock returned almost 300 percent.
At Investor, Ekholm, who is a trained engineer with Swedish and U.S. citizenship, generated impressive returns by updating the portfolio with wholly-owned, unlisted companies that helped to triple the stock price. The man is seen as an impressive executive, but he also sat on the board of Ericsson during the years when it declined, which has led some investors to doubt him, and prefer an outsider option.
In a recent phone interview with Bloomberg, Neil Campling, head of technology research at Northern Trust Securities, shared his opinion of the new Ericsson CEO: “First and foremost he has to rebuild the credibility of the company,” he said. “He has to do that by setting out a clear strategy and clear financial targets, and delivering on those targets.”
In a statement released on January 16, Ekholm said: “We are only at the beginning of the mobility journey as we in coming years will see massive transformation across industries. “Ericsson has shaped an entire industry and led technology developments.”
Ekholm was praised by Ericsson Chairman Leif Johansson in a statement: “Borje has a deep understanding of the business and the challenges Ericsson currently faces,” he said, adding that the CEO “will be able to guide Ericsson on the next steps of the company’s development.”
The most important thing for Ekholm to focus on as the new CEO of Ericsson, is evaluating the company’s costs, product offerings, and competitiveness against rising Chinese market rivals such as ZTE Corp. and Huawei Technologies. As China experiences an economic slowdown, these companies are getting more aggressive in their approach to pursuing business in Europe, which Ericsson will need to watch out for.
Business analysis firm IHS Markit claims Huawei took over Ericsson as the world’s largest supplier of mobile infrastructure in the third quarter of 2016 for the first time. In addition, CK Hutchison Holdings Ltd and VimpelCom Ltd have selected ZTE, not Ericsson, to merge and manage their Italian mobile networks. The deal represents evidence of Chinese suppliers scaling up Chinese operations, and also represents a big blow to Ericsson, which has business with both carriers.
Swedish telecom vendor Ericsson announced in October 2016 sweeping operational changes and mass job cuts following series of unfavorable financial results. Former CEO Hans Vestberg stepped down in July which speculated instability within the company. Ericsson has now announced that it will be executing 3,000 staff cuts from its Swedish operations ahead of schedule, and added that its restructuring costs are turning out to be more expensive than anticipated.
When Vestberg stepped down in July, Ericsson announced that Borje Ekholm would step in as CEO in 2017, after interim chief Jan Frykhammer would have overseen the company’s restructuring this year in order to reduce its annual operating expenses to $5.86 billion by the second half of 2017. To achieve this goal, Ericsson will be slashing its manufacturing costs by cutting jobs from its Swedish operation.
1,600 Ericsson employees will have accepted the company’s redundancy packages by the end of this year, Mobile World Live reports. Ericsson said in a recent update that the estimated cost of restructuring the company had risen to between SEK5.5 billion and SEK6.5 billion, up from initial estimate of between SEK4 billion to SEK5 billion. The reason why costs rose, according to Ericsson, is because the job cuts took effect sooner than expected, but also noted that its related fees from 2017 would likely be reduced.
When the layoffs have been executed by Ericsson, its workforce in Sweden will be around 13,000. The company is making cuts to production (about 1,000 employees), research and development (R&D) (about 800 employees), and other cuts to areas such as sales and administration (around 1,200 employees). In addition, Ericsson said that about 900 consultants will also depart.
Ericsson’s sites in Boras, Goteborg, Karlskrona, Kumla, Linkoping and Stockholm were reportedly the most impacted by the job cuts. Boras and Kumla are said to have been hit hardest. Ericsson will be outsourcing and automating more of its operations, hence the redundancy of many of its employees. Ericsson confirmed on December 8, 2016 that no more job cuts are planned.
It’s no secret that Swedish telecoms equipment maker Ericsson has been struggling of late. In a bid to revamp the company with a breath of fresh air, Ericsson has appointed Borje Ekholm as the new CEO, betting on familiarity with an executive from its board of directors and its main shareholder.
Early this month, Ericsson announced that it would be cutting up to 4,000 jobs in its homeland of Sweden, proving the company is going through a shaky period. Its former CEO Hans Vestberg stepped down in July after seven years, which further contributed to Ericsson’s instability. The new CEO, Mr. Ekholm, served as president of the Swedish firm Investor, controlled by the wealthy Wallenberg dynasty.
"He has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media," said chairman of the board at Ericsson, Leif Johansson. "Having served on Ericsson's Board of Directors for the past ten years, Borje Ekholm has full understanding of the challenges and the opportunities Ericsson currently faces," Johansson said.
In July, the daily Swedish newspaper Svenska Dagbladet cited sources close to the matter in reporting that Investor, which controls 21.4 percent of Ericsson's voting rights, was accused of slowing the restructuring by the other major shareholder, the bank Handelsbanken, AFP reported. Through its pension fund and the fund Industrivarden, Handelsbanken controls 20.1 percent. Sources said the purpose was to lower the share price and encourage Handelsbanken to sell its shares and attract Cisco as a buyer.
"It's really, really surprising. Ekholm was a central figure in the Ericsson Board of Directors and thereby supported the strategy that led to the current crisis," Handelsbanken analyst Daniel Djurberg told TT news agency. Ekholm is set to take office on January 16. He is expected to improve the company's earnings which suffered a net loss of 233 million kronor (24 million euros, $26 million) in the third quarter as operators slowed investments into mobile networks.
Ericsson’s stability has been called into question recently, after a series of events have shaken up the Swedish vendor this year, including the removal of its former CEO Hans Vestberg, reported mass layoffs, and a recent report by Swedish newspaper Svenska Dagladet, which says Ericsson is currently the subject of a dispute between two of its large shareholders – Investor (Wallenberg family) and Handelsbanken bank - one of which is calling for a takeover by Cisco.
The newspaper report cites sources close to the company, and mentions a major power struggle between the two Ericsson investors. Investor reportedly controls 21.50 percent of the voting rights on Ericsson’s board, while Handelsbanken, through its pension fund, Industrivärden, controls 20.05 percent. According to the report, representatives of Handelsbanken dislike Investor’s drastic restructuring measures.
Handelsbanken has accused Investor of halting drastic restructuration measures, saying “we consider that the behavior of Investor reflects the will to put measure on stock prices to compensate for Industrivärden at a low price and then sell to Cisco”. Investor has not disclosed its projects at participating in Ericsson.
Svenska Dagbladet also cites an executive who is worried about the uncertainty prevailing since Ericsson’s former CEO Hans Vestberg stepped down. At the end of July, Jan Frykhammar, Ericsson’s chief financial officer, was appointed as acting director general of the company. But even with Frykhammar in place, instability is being felt throughout the company.
“No one knows at Ericsson who makes the decisions,” an anonymous Ericsson employee told the newspaper. “It is not surprising to see market shares and profitability drop.”
It is worth mentioning that since mid-April 2015, shares have lost 46 percent of their value after a series of deceiving results. Cisco and Ericsson have concluded this year a commercial alliance in networks, aspiring at suggesting a common offer in several fields such as the cloud, and services pertaining to connected things, or even 5G.
Chinese telecoms equipment maker Huawei has reported a 40 percent increase in sales for the six months to 30 June 2016 over the same period last year, to CNY245.5 billion ($US36.7b) with an operating margin of 12 percent.
The news came on the same day that rival Ericsson announced the immediate departure of CEO Hans Vestberg in the wake of poor Q1 results. Ericsson announced that Vestberg had stepped down as president and CEO and member of the board of directors “with immediate effect.”
News outlets were in no doubt as to the real story, with headlines saying he had been “ousted”, “pushed out”, “shown the door” because of the company’s poor Q1 results reported a few days earlier. The announcement produced an immediate five percent spike in Ericsson’s share price.
Ericsson sales declined by eleven percent YoY and net profit by 26 percent. “Mobile broadband sales continued to decline particularly in markets impacted by a weak macro-economic environment such as Brazil, Russia and the Middle East,” Ericsson said. In Europe, “completion of mobile broadband projects in 2015 continued to have a negative effect on sales growth YoY.” 4G sales in Mainland China were stable YoY as the fast pace of deployments continued.
Co-nciding with the results, Ericsson announced plans to lay off thousand of workers.
Huawei in contrast appears to be doing well. CFO, Sabrina Meng, said: “We achieved steady growth across all three of our business groups, thanks to a well-balanced global presence and an unwavering focus on our pipe strategy. We are confident that Huawei will maintain its current momentum, and round out the full year in a positive financial position backed by sound ongoing operations."
Swedish telecom giant Ericsson recently released its half-year financial report, revealing a financial drop in sales. The company’s shares fell hard on the Stockholm stock exchange on Tuesday, July 19, after the results were revealed, dropping 5.6 percent by closing. Ericsson employees fear mass layoffs after Ericsson’s CEO, Hans Vestberg, stepped down on July 25.
“It has been a tough quarter,” said Hans Vestberg, Ericsson CEO, last week. “The trends we saw at the end of 2015 and in the first quarter of this year – particularly in countries with macroeconomic challenges and currency devaluations – have intensified during the second quarter.”
After stepping down as CEO, 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 Board of Directors announced that Hans Vestberg steps down as President and CEO and member of the Board of Directors of Ericsson with immediate effect on Monday. Jan Frykhammar, Executive Vice President and CFO, will assume the CEO position until a new CEO is in office.
"Hans Vestberg has led the company for seven years through significant industry and company transformation,” said Chairman of the Board, Leif Johansson. “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. 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."
In conjunction to presenting its weak earnings report for the second quarter on July 19, the company presented a strong 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 continued.
Ericsson’s financial report revealed worrying times for the company, with overall sales down by as much as 11 percent in the second quarter. What’s more, in markets like Russia, revenue was almost non-existent. Swedish news website The Local reported that underlying profit had plummeted even further, falling by 40 percent.
In response to the crisis, Ericsson introduced an austerity package to get the company back on track. But many fear that the package could mean mass job cuts. “It is our ambition to continue to gradually increase our profitability,” said Hans Vestberg last week.
In order to restructure Ericsson to become profitable again, the company is doubling its efficiency measures. That will likely include thousands more layoffs across the group, according to The Local. 3,800 employees were already laid off in the second quarter alone. “There is no country that will be excluded from this,” said Vestberg, referring to the fact that Swedish employees could be hit hard by the layoffs.
15,000 of Ericsson’s total 116,000 employees are located in Sweden. The trade union for employees in Sweden has predicted “four digit reductions in personnel in their country alone.”
Ericsson’s management for responding to its low sales has been criticized by the likes of Per Norlander, Chief Union Negotiator for graduates employed by Ericsson. Cutting jobs won’t have a positive effect on the company, according to Norlander, who believes that losing young talent would prevent Ericsson from making future tech breakthroughs. He believes Ericsson’s management is placing too much emphasis on the economic side of things.
“There is not enough focus on engineering from the management just now and too much on economics,” he said.
Last week, questions were being raised about whether or not Vestberg should keep his position as CEO. “One can understand that, of course, stock prices have not developed well, and both my and the management’s job is to continue to develop Ericsson,” Vestberg told news agency TT.
Suitable candidates for the CEO position, according to Mobile World Live, include Anders Runevad, CEO of Vestas, the Danish firm that is one of the world’s leading wind turbine vendors, who was previously vice president of Sony Ericsson and Ericsson’s head of Central and Western Europe.
An Ericsson press statement announced that effective immediately, Jan Frykhammar, Executive Vice President and CFO, steps into the position as President and CEO until the now initiated recruitment search has been concluded. As customary, the search process will comprise both internal and external candidates.
Jan Frykhammar joined Ericsson in 1991, and has held various positions in finance and business control. In 2009, Frykhammar became Executive Vice President, CFO and Head of Group Function Finance, and before that he was Head of Business Unit Global Services. He holds a Bachelor of Business Administration and Economics from the University of Uppsala, Sweden.
Johansson says: "Jan has made it clear that he is not aspiring to permanently take on the CEO role. However, I am very pleased that he has accepted this assignment. Jan will secure continued strong execution and leadership in the current situation."
The Active Telecoms team was at At Mobile World Congress 2016 where Ericsson President and CEO Hans Vestberg said digital disruption will come to every industry in 2016 and made major announcements in 5G, the Internet of Things (IoT) and cloud. With these announcements, Ericsson solidifies its positions as a leading ICT transformation partner for customers across industries.
As Ericsson's vision of 50 billion connected devices approaches, three fundamental ICT forces - broadband, mobility and cloud - are rapidly reshaping value chains, digitalizing business models and creating possibilities that were previously unimaginable. As an ICT leader, Ericsson is enabling this transformation and simultaneously evolving itself.
Vestberg said: "Along with our industry and our customers, Ericsson is on a transformation journey. Today, 66 percent of our business comes from software and services; just years ago the majority was hardware. The majority of our principal competitors are ICT players, rather than telecommunications businesses. Our portfolio is constantly evolving to keep pace with customer demands. Now, with industries and even whole societies being disrupted by mobility, broadband and cloud, we are accelerating our own transformation."
Vestberg identified 5G, IoT and cloud as the hottest topics in the ICT industry - and made major announcements in each area:
Ericsson has agreements with 20 major operators around the world to work together on 5G - more than any other vendor. 5G radio test-bed field trials will start in 2016.
Ericsson's new IoT transformation offering is a modular set of IoT professional services and software solutions that can be tailored to operators' needs and IoT ambitions. It leverages Ericsson's global services footprint, industry experience and technology leadership to help customers drive IoT transformation and business.
Ericsson has announced plans to form a global business, technology and services alliance with Amazon Web Services (AWS) to accelerate cloud transformation for telecoms service providers.
Establishing a Unified Delivery Network
Ericsson also announced the establishment of a Unified Delivery Network (UDN) with global service providers to launch a new ubiquitous content delivery ecosystem. The UDN is supported by service providers including Hutchison, Telstra, AIS and Vodafone, and by leading content providers. The UDN aggregates regional service provider capabilities on a global scale, and allows consumers to benefit from enhanced quality video experiences through seamless delivery.
Vestberg underlined that many of these announcements are based on industry partnerships, since no single company is capable of capturing every opportunity by itself in an increasingly complex ICT landscape. This year, more than 50 partners have joined Ericsson at MWC at various levels.
Update on Cisco Partnership
One high-profile example is Ericsson's next-generation strategic partnership with Cisco to create the networks of the future. Vestberg was joined on stage by Rima Qureshi, chief strategy officer, Ericsson, and Hilton Romanski, chief strategy officer, Cisco, to present the latest updates on the partnership.
With a joint and complete end-to-end offering, global market presence, unparalleled market position and strong cultural fit, the partnership was developed to create the networks of the future - and through this, shape the direction of the industry. Since the partnership was announced in November 2015, close to 200 customer engagements have resulted in multiple customer wins.
Ericsson also introduced the Ericsson Dynamic Service Manager, a new product for real-time management of network services via multiple technology and vendor domains. The result of a joint collaboration and encompassing intellectual property from the two companies, the Dynamic Service Manager will initially focus on multi-vendor mobile backhaul, IP core, and enterprise VPNs. It brings together Ericsson's leadership in OSS and Cisco's expertise in IP and optical for the cost-effective management of complex network services. General availability of this product is expected in second half of 2016.