Ericsson's Chief Executive Steps DownEricsson's Chief Executive Steps Down

TOCKHOLM, Sweden (AP) -- LM Ericsson is replacing longtime chief executive with an outsider as the telecom equipment maker tries to return to profitability after two years of losses. Ericsson shares surged on the news.

Kurt Hellstroem, who has been with Ericsson for 18 years- the last four as its president and CEO-said Thursday he wanted to take advantage of a clause in his contract that would let him retire when he turned 60 this year.

The Stockholm-based company named Carl-Henric Svanberg, the CEO for international lock maker Assa Abloy, to its top position. He will take over April 8, when Ericsson holds its annual shareholder meeting. Hellstroem will stay on until the end of 2003 to help with the transition.

Analysts praised the selection of Svanberg, who has been CEO of Assa Abloy since 1994 and has been lauded for turning Assa Abloy into one of the world's best known lock makers.

"There is a notion that this symbolizes a new phase for Ericsson," said John Bucher, a research analyst with Gerard Klauer Mattison & Co. in Los Angeles. "They brought a telecom outsider into the company. They brought somebody who has, it would appear, vast widespread respect and I can't help but think the turn over ... is meant to signal a new phase."

Svanberg will oversee the rest of Ericsson's ambitious cost-cutting program as it tries to weather the telecom slump.

"Carl-Henric Svanberg will keep the same focus as Kurt Hellstroem, namely to make Ericsson return to profit, cut costs and to strengthen our leading position," said Ericsson chairman Michael Treschow.

Svanberg signaled his faith in the company by investing 100 million kronor ($11.7 million) in Ericsson shares.

"I will take over in hard but exciting times. I am humbled by the task, but I have great confidence in Ericsson and its employees," he said during a news conference.

In trading Thursday on the Stockholm stock exchange, shares of Ericsson gained more than 14% on the news before closing at 6.15 kronor (72 cents), up 4.2% on the day. Shares of Assa Abloy were down 13 kronor ($1.52), or 14.6%, to 76 kronor ($8.88).

Ericsson's U.S.-traded shares gained 51 cents, or nearly 8%, to close at $7.23 on the Nasdaq Stock Market.

Ericsson, along with other telecom-equipment makers have been hard hit as operators and providers cut back spending on their current networks and pushed back plans for new, faster networks in a bid to preserve cash.

Earlier this week, Ericsson said its losses in the fourth quarter more than doubled, reporting an 8.3 billion kronor ($968.7 million) loss in the final three months of 2002. Since the beginning of 2001, the company has lost more than 40 billion kronor.

The company has been cutting costs and trimming its work force. When it started in 2001, the company employed 107,000 worldwide. By the end of 2002, Ericsson employed more than 64,600.

"They've taken the right steps," Bucher said. "Long-term, this company faces, I think, good prospects. But over the next 12 months they face a difficult market. They're going to reap the benefits of the restructuring they've done."