Ericsson CEO Vestberg Is Said to Tell Board He Plans to Stay

Jan 30, 2014 1:50 am ET

(Updates with earnings in fourth paragraph.)

Jan. 30 (Bloomberg) -- Ericsson AB Chief Executive Officer Hans Vestberg told directors he has no plans to step down following reports that he is among candidates to succeed Microsoft Corp.’s Steve Ballmer, according to a person familiar with the matter.

The 48-year-old said at a board meeting yesterday that he remains committed to the company, said the person, asking not to be identified because the deliberations are confidential. Directors were ready to take a look at a list of potential successors in case he is chosen by Microsoft as CEO, another person with knowledge of the matter said.

Vestberg is among a handful of candidates Microsoft is evaluating as successor to departing CEO Ballmer, people briefed on the search told Bloomberg News this month. An exit by Vestberg from Ericsson would have left the world’s largest wireless-network maker without a leader as it tries to fend off intensifying competition from Chinese suppliers such as Huawei Technologies Co.

Ericsson today reported fourth-quarter revenue and net income that missed analysts’ estimates as phone operators curbed spending on their systems. Gross profit margins topped analysts’ predictions.

A representative for Stockholm-based Ericsson declined to comment on Vestberg’s discussions with the board. Peter Wootton, a spokesman for Microsoft, also declined to comment.

CEO Search

Other candidates Microsoft is considering include its cloud-computing chief, Satya Nadella, and former Nokia Oyj CEO Stephen Elop, as well as other outsiders, people familiar with the search have said. The board hasn’t yet reached a decision and who is under consideration is still subject to change.

Ericsson’s U.S.-traded shares fell 0.6 percent to $11.95 at yesterday’s close in New York, giving the company a market value of $39.3 billion. The stock closed at 77.40 kronor in Stockholm. It gained 21 percent in 2013.

Vestberg isn’t the first CEO to have to respond to board concerns about the potential loss of the their leader.

Ford Motor Co. directors were frustrated in December when Alan Mulally’s candidacy at Microsoft distracted from the global debut of the automaker’s redesigned Mustang sports car, according to a person briefed on the matter. Mulally, 68, said last year that he would remain at Ford at least through 2014. Directors urged him to clarify that he was staying at Ford once it became clear he was out of the running at Microsoft, the person said.

Scanning Headlines

Last month, Qualcomm Inc. announced Chief Operating Officer Steve Mollenkopf will ascend to the CEO job in March, earlier than planned. The announcement came the day after he was identified by Bloomberg News as a possible successor to Ballmer. Current CEO Paul Jacobs said in a Jan. 8. interview in Las Vegas that the disclosure “accelerated” the appointment.

For Ericsson, the Jan. 15 revelation about Vestberg was the main topic in at least one hastily convened meeting the next morning, according to a person who attended and isn’t allowed to speak publicly on the matter. A Stockholm-based senior engineer said he scanned headlines first thing that day and was shocked by the news.

The Hudiksvall, Sweden-born Vestberg has worked in China, Brazil, Mexico and the U.S., heading the global services unit before becoming chief financial officer in 2007 and CEO in 2010. Seeing how difficult it would be to battle larger mobile-phone rivals in a consolidating market, Vestberg oversaw the divestment of Ericsson’s stake in its handset venture with Sony Corp. in 2012.

Telcordia Takeover

The tall, blond Swede, who seldom wears a tie and is quick to grab a white-board marker to expound the virtues of mobile connectivity, has expanded Ericsson’s services offering with the 2012 acquisition of Telcordia Technologies for $1.15 billion and more recently Microsoft’s own Mediaroom TV business.

Vestberg has a bachelor’s degree in business administration from Sweden’s Uppsala University and is chairman of the Swedish Handball Association. Under Vestberg, Ericsson shares have risen about 18 percent, compared with a 38 percent increase by Sweden’s benchmark OMX Stockholm 30 index. Revenue climbed from 206 billion kronor ($32 billion) in 2009 to an estimated 227 billion kronor in 2013, according to the average of analysts’ estimates compiled by Bloomberg.

The rate of chief executive replacements is quickening, adding to the risk of disclosures. U.S. corporations were on track last year to switch CEOs at the fastest pace in five years, as they grapple with shifting customer tastes, competition from upstarts and restive shareholders.

Through the third quarter, 43 companies in the Standard & Poor’s 500 Index were operating with new chiefs, according to Spencer Stuart. That suggests 2013 will surpass the 49 of 2011, the biggest for turnover since 2008.

--With assistance from Jeff Green in Southfield, Michigan and Keith Naughton in Detroit. Editors: Kenneth Wong, Ville Heiskanen