Ekholm, Ericsson’s new CEO
With the news that Ericsson will have a new CEO from January 2017, here are some very quick impressions from Borje Ekholm’s short introductory media and analyst call.
With ten years on the board, with his Swedish engineering background with his past as chief executive of the Wallenberg family’s main investment vehicle, Investor – which owns 20% of Ericsson’s shares – and with the revelation that Ekholm turned out to be the only candidate that Ericsson’s board seriously considered, there is a danger that Ekholm will be viewed as an internal, continuity candidate, and therefore will not have the capacity to turn around a position that has seen Ericsson’s shares lose nearly half their value in the past six months.
And certainly there were some indications that Ekholm does not plan any immediate upheaval. “I do not believe I should come and say do this and this and this,” he said, “That is not the way a CEO should be.”
(Just as an aside I would also add that, purely as “mood music”, on the call there was too much in-joke Swedish banter based on whether this or that engineering school is better. It sounded parochial and inward looking, at a time when the company needs to be facing out internationally. That said, it was also pointed out Mr Ekholm holds US as well as Swedish citizenship.)
So the plan is still the plan – for acting CEO Jan Jan Frykhammar to deliver on the current drive for more profitability, i.e. job cuts and site closures, with a re-targetting of R&D. Ekland said that would then deliver profitability and stability. After that would come a drive for topline growth in new opportunities presented by the market.
So far, so “no change”. However, he clearly indicated that when the time is right, he would be “comfortable” with making strategic technology choices.
Interestingly, there was also a tactful insertion of a little daylight between Ekholm’s role on the board and the previous executive management. There was a hint, a subtle one perhaps, that he wasn’t totally 100% behind every decision made to date.
“There’s a difference between being a board member and actually running a company,” he said. He left himself room to be more radical than he is, perhaps, letting on.
Market reaction to Ekholm’s appointment has, so far, seen a further dip in share value.
The challenge for Ekholm will be to deliver clarity to the market as quickly as possible, given he does not take over officially until January. The company is faced with mid to near-term opportunities in 5G, in cloud and in telco virtualisation, as well as in its media markets. A steady-as-she-goes period is unlikely to convince the markets that Ericsson has the agility to meet those demands, or to meet competitive pressures as Huawei forges ahead globally and as IT players target the telco space. There is also a need to provide ongoing clarity on the Cisco partnership – something that was not mentioned on today’s short call.
So, in a nutshell: although Ekholm has deep ties to the company – 10 years on the board and connections to existing major investors – he needs to establish his own executive independence and provide real leadership, and do it quickly.
