Can Ericsson Achieve More without Leif Johansson?
Leif Johansson is stepping down as the chairman of network equipment giant Ericsson (ERIC), ending a six-year stint at the company. Johansson’s exit could make room for Ericsson CEO Börje Ekholm to flex his muscles more as he tries to turn the company’s dwindling fortunes around.
Although Ericsson has been winning new contracts here and there, the company has largely struggled in recent years. Its annual sales fell in 2016, and they’re expected to fall further this year. The company’s profits have also suffered.
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More room to executive turnaround plans
In the chart above, you can see how Ericsson has struggled to grow sales in recent years.
Ericsson has been rattled by a slowdown in carrier spending on network upgrades and fierce competition from Huawei and Nokia (NOK). As the 4G LTE rollout has peaked in key markets like the United States (SPY), major carriers like Verizon (VZ) and AT&T (T) aren’t spending as much on 4G network gears.
By letting go of old faces like Johansson, Ekholm could feel more comfortable and have more space for his turnaround plans. Ekholm was appointed CEO earlier this year. He has promised to transform Ericsson’s fortunes, citing cost-cutting among his priorities.
Allowing Ericsson to chart a new path
In the statement announcing his plan to leave Ericsson, Johansson hinted that there was a need to allow the company to chart a new path.
“The company now enters a new phase, with focus on execution, and we also have a new ownership constellation. It is natural to let the owners jointly propose a chairman and well ahead of this I want to announce that I will not be available for a next term,” said Johansson.
Johansson’s exit may also bring a sigh of relief to Ericsson investors who have been pushing for more leadership changes at the company.