As part of cost-cutting plans, Ericsson workforce reduced by 20,500
In the past year, Ericsson has cut some 20,500 positions, with more than 2,000 job cuts in the second quarter of this year. The workforce reductions are part of a plan to reduce costs by more than $1 billion.
“These are tough but necessary actions to ensure competitiveness,” President and CEO Börje Ekholm said. Noting run-rate savings, he said “the effect is gradually becoming visible in the earnings, mainly through lower service delivery costs and common costs…We will continue our efficiency activities throughout the year.”
Based on its financial reports, Ericsson’s total sales were down 1% compared to Q2 2018, although the networks segment saw a 2% increase year-over-year with the North American market driving that growth. Excluding restructuring charger, the operating margin for the networks segments was 13.3%.
Eckholm said the uptick in networks came from operators prepping to deploy 5G in the U.S. “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.”
Related to its internet of things (IoT) initiatives, Eckholm described sales as “still low,” but added, “We see increasing momentum with several important customer wins with our connectivity platform in the quarter.”
In its digital services business unit, Ericsson reported an improved gross margin, but is continuing to see an operating income loss.
On the same day it reported Q2 financials, the infrastructure vendor appointed Jan Karlsson to the post of senior vice president and head of Business Area Digital Services. That goes move goes into effect on Aug. 1.
Karlsson joined Ericsson in 2014 and most recently served Head of Solution Area BSS, which is within the digital services group.
