Shares in Ericsson are down nearly 15 percent this morning, as the telecom equipment giant announced it has widened its restructuring efforts and shaken up its executive staff.
The news accompanied Ericsson’s first-quarter earnings today, in which the company’s net income missed Wall Street’s expectations by a wide margin. It suggests that Ericsson is still adapting to the multiple transitions facing the networking industry, including the rise of hyperscale cloud providers and the increased importance of software development.
Ericsson is already undergoing a restructuring aimed at saving SEK 9 billion (US$1.11 billion) in expenses in 2017 relative to 2014. During the latest quarter, though, the company got more aggressive with its restructuring. Today’s earnings release notes that Ericsson’s projected restructuring charges are now SEK 4 billion to 5 billion ($490 million to $620 million), up from the previous estimate of SEK 3 billion to 4 billion ($370 million to $490 million).
The company hasn’t mentioned anything about additional layoffs yet. Ericsson, which employs about 115,000, cut around 6,000 jobs last summer.
For the first quarter, Ericsson reported revenues of SEK 52.2 billion ($6.4 billion) and net income of SEK 2.1 billion ($258 million), or SEK 0.6 (7 cents) per diluted share.
For the same quarter a year ago, the company reported revenues of SEK 53.5 billion ($6.6 billion) and net income of SEK 1.5 billion ($185 million), or SEK 0.4 (5 cents) per share.
On the executive side, CEO Hans Vestberg has realigned his Executive Leadership Team (ELT), resulting in some promotions, some new faces, and five cuts from the ELT lineup.
Senior Vice President Rima Qureshi has been named chief strategy officer and head of the North American region. Qureshi was previously head of group functions strategy and head of mergers and acquisitions.
The former North America head, Angel Ruiz, is among the departures from ELT. He’ll continue at Ericsson with the title of chairperson of the North American and Latin American regions.
Arun Bansal, formerly head of the radio business unit, is now head of all network products. Per Borgklint has been named chief innovation officer and will head a new business unit for media. He was formerly Ericsson’s head of support solutions.
Anders Lindblad, a new addition to the ELT, is now senior vice president and head of Business Unit IT & Cloud Products. He was previously head of Business Unit Cloud & IP. So, even if his job is substantially different, it still sounds kind of the same, phonetically. In English. (We have not contacted Ericsson to see if they care.)
Ericsson also created a new spot in the ELT for the head of sustainability and corporate responsibility. That seat is being filled by Elaine Weidman-Grunewald.
Ulf Ewaldsson will continue in his role as CTO.