Ericsson names Svanberg as new CEO

STOCKHOLM: Swedish loss-making telecom equipment maker Ericsson said that Carl-Henric Svanberg would become its new President and chief executive.

Svanberg, currently CEO of the world's leading lock maker, Assa Abloy, would take over as Ericsson CEO from Kurt Hellstrom on April 8, Ericsson said in a statement.

The appointment of a new boss extends the sweeping changes at the top for troubled Ericsson , after it took on a new chairman and fresh board members last year.

Chairman Michael Trescow has been a driving force behind the overhaul in his bid to return the company, which has been in the red for nine straight quarters, back to profit. Battling a shrinking market, Ericsson expects to return to profitability only towards the end of this year.

Markets welcomed the appointment of a man who has a reputation as a cost-cutter and strong manager despite the fact he has no experience of the telecoms industry.

Svanberg, currently head of the world's leading lock maker, Assa Abloy, will take over as Ericsson CEO on April 8 from Kurt Hellstrom, who has served as president of the company since 1999 and as CEO from 2001.

A senior Ericsson source told Reuters Svanberg, who turned 50 last year, had been the only candidate proposed to the board.

"The board wanted a candidate who was a Swede, a well known chief executive of a listed company, and well below retirement age," the source said.

Hellstrom will turn 60 in December this year, often the retirement age in Sweden. He has been struggling to slim down Sweden's biggest company since he took the helm from Sven-Christer Nilsson -- who was sacked for not restructuring the company fast enough.

Ericsson, like its rivals in the sector, has been hit by the falling demand for telecoms equipment from operators, many of whom are struggling under piles of debt which they have to service amid a slowing world economy.

But Hellstrom has been heavily criticised by the media and some investors for not acting decisively enough to prevent Ericsson's mobile handset business, once the third biggest in the world after Nokia and Motorola from withering.

MEDIA-SAVVY

With the bulk of Ericsson's cost-cutting scheme already in place, Svanberg's job will be to make sure that the company meets its targets of reducing its workforce to below 60,000 by end-2003 from just above 64,000 at the end of 2002, in order to reach a planned break-even on sales of 120 billion crowns.

Svanberg is regarded as more media-savvy than Hellstrom, who often appeared uncomfortable in the spotlight.

Investors welcomed Svanberg's appointment and by 1108 GMT, Ericsson shares were up 11.9 percent at 6.55 Swedish crowns.

"It is positive for Ericsson and the market that the issue (of succession) is solved," said Marianne Nilsson, fund manager at Sweden's biggest fund Robur, which has 3.3 percent of votes.

"Our view is that Svanberg is a person with good management skills, well-known and with international experience. He has created a good corporate culture and results at Assa Abloy."

Assa Abloy stock fell 10 percent in Stockholm on disappointment that the CEO was going and as the company's fourth-quarter results came in just below market forecasts.

© Reuters