Ericsson sees light on horizon after major layoffs

Swedish telecoms giant Ericsson posted boosted second-quarter results on Wednesday, after the company had to lay off thousands of staff members as part of a major cost-cutting scheme.

Ericsson sees light on horizon after major layoffs
Ericsson CEO Börje Ekholm. Photo: Christine Olsson/TT

Ericsson built on its improved results in the first quarter and noted an operating profit of 0.2 billion kronor (compared to a 0.5 billion loss just a year earlier), despite a slight drop in net sales (49.8 billion kronor compared to 50.3 billion in 2017, but up 15 percent on the first quarter of 2018).

President and CEO Börje Ekholm said the company was well on track towards meeting its 2020 target of an operating margin of at least 10 percent, thanks to key investments in technology.

“Customers turn to new technology in order to manage growing demand for data with sustained quality and without increasing costs. This, together with fixed wireless access, represent the first business cases for 5G. We will continue to invest in securing leadership in 5G,” he said.

However, the good news does not come without costs for the telecoms giant, which in July 2017 launched a major restructuring drive that has seen 20,500 jobs cut – 2,000 in the last quarter.

The 10 billion kronor cost reduction programme has now been completed, Ericsson said.

“These are tough but necessary actions to ensure competitiveness. Run-rate savings to date amount to more than 10 billion kronor, and the effect is gradually becoming visible in the earnings, mainly through lower service delivery costs and common costs,” said Ekholm in a statement.

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