Ericsson says it will “accelerate” planned cuts
Last month network infrastructure giant Ericsson reported across the board sales losses in a Q2 2017 financial report with CEO Borje Ekholm projecting a continued decline in operating income between $362 million and $600 million over the next year. Now, Swedish media outlet SvD Naringsliv is reporting the vendor plans to cut 25,000 jobs.
Asked for more information, Ericsson shared the following statement with RCR Wireless News and other publications: “Ericsson has previously communicated that a key component in the company’s focused business strategy is to reduce costs and increase efficiency. In connection with the Q2 report 2017, Ericsson communicated that the company, in light of the current market outlook, will accelerate the planned actions to ensure that the target of doubling the 2016 operating margin beyond 2018 can be met. Actions will be taken primarily in service delivery and common costs, but do not include R&D. The plan is to implement cost savings with an annual run rate effect of at least SEK 10 b. [$1.2 billion] by mid-2018, of which approximately half will be related to common costs. Ericsson has not communicated which specific units or countries that could be affected. It is too early to talk about specific measures or exclude any country. As Ericsson executes on these plans to save costs, the company will communicate this, and to what extent employees could be affected.”
During the Q2 earnings call, Eckholm said, “It’s quite clear we need to improve our own efficiency. We’re also continuing our investments in innovation and new business development including our investment in [internet of things].”
In June, the company said it will sell its power modules unit to Flex for an undisclosed amount. Around the same time, Bloomberg reported that Ericsson may also be selling its $1 billion media business.
Eckholm took the CEO post last year after then-CEO Hans Vestberg stepped down. On June 1, Leif Johansson, chairman of the company’s board of directors since 2011, said he would not stand for re-election to the post for a term beginning in 2018.
