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Ericsson soars, names new CEO
STOCKHOLM, Sweden (CNN) -- Loss-making Ericsson shares soared on Thursday after it named Carl-Henric Svanberg as its new chief executive. Svanberg, currently CEO of the world's leading lock maker, Assa Abloy, will take over as Ericsson CEO from Kurt Hellstrom on April 8, Ericsson said. That ended months of speculation, sending the stock up 11 percent to 6.55 Swedish crowns in early Stockholm trading. Hellstrom became president of Ericsson in 1999 and CEO from the start of 2001 but has been in charge while the world's biggest maker of wireless network equipment posted losses for the past seven quarters as demand for equipment continues to decline. Ericsson, like its rivals, has seen sales decline as telecom operators slashed spending on wireless equipment in an effort to manage the balance sheets after spending heavily on expansion.
The company has said it would continue with its cost cutting programme, including more jobs cuts, to return to profitability. It had 64,600 employees at the end of last year and is aiming to bring its workforce to below 60,000 by the year-end, down from the 107,000 employees at the start of 2001. Chairman Michael Trescow, the driving force behind the overhaul, told CNN it was Hellstrom's decision to step down as he wanted to retire at the age of 60. Hellstrom will turn 60 in December this year, often the retirement age in Sweden. "The restructuring will go on in order to show a profit sometime this year," said Trescow. "Svanberg has a successful track record and is a stong leader with strong reputation. He's got the right age (50) seeing as we have changed CEO so frequently in the past." "Svanberg will keep Helstrom targets," Trescow said, "There are no quick changes" to Ericsson's problems. Hellstrom had 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. 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 (NOK) and Motorola (MOT), from withering. Ericsson has been forced to go into partnership with Japan's Sony to make mobile phones after losing market share to Nokia and Ericsson and had to ask shareholders for 30 billion crowns to prop up its ailing balance sheet. Reuters contributed to this report.
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