Carl-Henric Svanberg boosted earnings at Assa Abloy AB, the world's largest lockmaker, in 11 of the past 12 quarters. The company's shares are worth 14 times more than when he became chief executive officer in 1994, and in that period he turned the Swedish company into a global force whose customers include the White House.
Investors and analysts aren't sure that's equipped Svanberg, 50, to revive Ericsson AB, the biggest maker of mobile-phone networks. Ericsson has racked up US$4.7 billion of losses in seven straight quarters and its shares have tumbled 96 percent since March 2000.
"What do you think of the Titanic when it's hit the iceberg and the water is gushing in?" said Philip Townsend, an analyst at Natexis Bleichroder Inc, who has a "strong sell" rating on Ericsson shares.
"Changing the captain doesn't help," he said.
While Svanberg made 45 acquisitions at Assa Abloy, taking the number of employees to 28,750 from 4,700, at Ericsson he will be overseeing a cost-cutting program involving shedding almost 50,000 jobs, or half the workforce.
Svanberg has no experience in the phone industry.
The Wallenberg family, which controls 38 percent of Ericsson, approved Svanberg's nomination in a departure from a tradition of naming CEOs drawn from the ranks of senior managers at the companies controlled by Sweden's richest family.
"It's very important that Svanberg is from outside Ericsson and may thus be able to better shake up the organization," said Karri Rinta, an analyst at Evli Pankki Oyj, a Finnish investment bank.
"Every operation will be under the magnifying glass," Rinta said.
Svanberg is the fourth Ericsson CEO in five years, replacing Kurt Hellstroem, who some analysts say was too slow in reacting to a drop in sales. Demand for Ericsson's switching gear and base stations has declined for three consecutive years.
"The market for infrastructure is horrendous," said Tarkan Conger, a fund manager at Iceland's Kaupthing Bank hf, which has about US$3.5 billion under management, including Ericsson shares.
"It's an exceptionally tough period that may continue for 12 to 15 months," Conger said.
To lure Svanberg, Ericsson had to double his base pay to 12 million kronor (US$1.41 million) a year and offer him a bonus that could be worth as much as 80 percent of the fixed salary.
If he gets fired, he will be paid two years' salary.
"Everyone is totally focused on getting back to profitability as soon as possible, no matter how the market develops," Svanberg said at a press conference yesterday.
Assa Abloy shares on Thursday slumped 14.6 percent to 76 kronor, while Ericsson gained 4.2 percent to 6.15 kronor, following the announcement of Svanberg's nomination to Ericsson.
Ericsson, once the most valuable stock in Sweden, now has a market value of less than US$12 billion, compared with a peak of US$212 billion less than three years ago.
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