The Board of Directors of Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) has finally decided on Monday to oust Hans Vestberg as CEO after holding the post for nearly seven years. In line with this, Jan Frykhammar, Telefonaktiebolaget LM Ericsson Chief Financial Officer (CFO), has been appointed as interim CEO.
Accordingly, the Board of Directors find it necessary to elect a new leader who will prepare Telefonaktiebolaget LM Ericsson for a recovery chapter and will competently drive meaningful growth for the company, given the challenges it is currently facing.
Poor Company Performance
Telefonaktiebolaget LM Ericsson had recently experienced a highly disappointing fiscal year under Vestberg’s leadership, prompting the Board of Directors to come up with the decision.
Nonetheless, the move was no longer surprising. Analysts and shareholders alike have been making remarks about the company’s poor performance over the past few months, highlighting the fact that Telefonaktiebolaget LM Ericsson shares are down 30% year-over-year. The weak second quarter financial results might as well be considered as a final deciding factor to kick out Vestberg,
The company had to do various cost-cutting solutions to counter the poor performance lately. Part of such efforts resulted to the laying off of thousands of employees, which is not that encouraging for investors.
Telefonaktiebolaget LM Ericsson’s Partnership with Cisco Systems, Inc. (NASDAQ:CSCO)
Last week, Telefonaktiebolaget LM Ericsson has revealed that its collaboration with Cisco Systems has already allowed them both to seal over 30 deals. Under the partnership, Telefonaktiebolaget LM Ericsson and Cisco Systems aims to generate a total joint sales of $1 billion by 2018. So far, the former claims that the tie-up has been off to a good start.
However, the industry competition is becoming tighter as new market players emerge, offering better products and services at more affordable prices. One of the company’s biggest rival today is Huawei Technologies Co. Ltd., which is also among the fastest-growing companies in the industry today even in smartphone manufacturing. The Chinese competitor on Monday revealed that its revenue for the first two quarters alone jumped 40%.