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(REUTERS) UPDATE 3-New CEO appointment lifts Ericsson spirits

(Adds investor, Ericsson source comment, background)
By Jan Strupczewski
STOCKHOLM, Feb 6 (Reuters) - Loss-making telecoms equipment
maker Ericsson named Swede Carl-Henric Svanberg as its new chief
executive on Thursday, ending months of uncertainty and driving
its battered stock some 12 percent higher.
The appointment of a new boss extends the sweeping changes
at the top for troubled Telefon AB LM Ericsson <ERICb.ST>, the
world's biggest producer of mobile networks, 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 <ASSAb.ST>, 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 <NOK1V.HE> and Motorola <MOT.N>, 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.
"(Ericsson's) incoming CEO has a reputation for excellent
cost cutting and acquisition integration. Cost-cutting is very
much needed at Ericsson," said one telecoms equipment analyst.
Ericsson shares lost a quarter of their value over Monday
and Tuesday after the company reported weaker-than-expected
fourth-quarter earnings and said it expected a further fall in
sales this year.
((Reporting by Jan Strupczewski, Anna Ringstrom and Mats
Falck; editing by Sophie Walker; [e-mail];
Reuters Messaging: [e-mail]; +46 8
700 1003))
REUTERS
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