Telecom equipment maker Ericsson continues to struggle to regain its footing in a market fraught with fierce competition and declining margins. During its fourth quarter 2017 earnings call with investors today, the company revealed that its job cuts topped 10,000 in the quarter. For the entire year, the firm reduced headcount by 17,000, a number that included contract workers as well as employees.
In addition, the vendor said that two key executives would be stepping down. Ulf Ewaldsson, former CTO and the current head of Ericsson’s digital services, and Elaine Weidman, currently head of the company’s sustainability and public affairs division, will leave the executive team effective Feb. 1. Ewaldsson, who played a key role in developing the company’s 5G vision, will remain with the company as an advisor to CEO Börje Ekholm.
At the same time, the company said it has added Asa Tamsons as senior vice president and head of emerging business. Tamsons will head up the new business unit that will focus on the Internet of Things (IoT) and distributed cloud solutions.
Helena Norman, who currently oversees the marketing and corporate relations division, will now oversee sustainability and public affairs as well.
The changes today are just the latest in what has become a revolving door of executives. Just last November the company announced that CFO and former interim CEO Jan Frykhammar, and EVP Magnus Mandersson were leaving the company.
The company reported a net loss of $2.4 billion for the quarter compared to a net loss of $203 million in the same quarter the previous year. Revenue was $7.2 billion, down from $8.3 billion in the same quarter last year. The company blamed the drop on lower spending by Chinese wireless operators and increased competition from Chinese vendor Huawei.
At mid-day, the company’s stock was trading at $6.35 per share, down 9.4 percent from a close of $7.01 per share yesterday.
Despite the losses, Ericsson executives said that the company is seeing an increase in traction with 5G, noting that wireless operators are starting to engage in discussions. They also said the company was seeing positive momentum in North America, noting that it is working with AT&T on the deployment of its FirstNet first responder network, and with Deutsche Telekom – parent of T-Mobile US – and Verizon on 5G.
Media Business Sale
Ericsson also announced that private equity firm One Equity Partners will acquire the majority stake in Ericsson’s media business. That business unit includes MediaFirst, an IPTV platform Ericsson acquired from Microsoft in 2013.
One Equity Partners will acquire 51 percent of the media unit and Ericsson will maintain control over the remaining stake. Ericsson said it will transfer the assets to the new company in the third quarter and will then operate as an equity partner.
Ericsson said its ongoing cost savings plan is progressing and that it has achieved an annual run rate of $761 million in savings, which is more than half-way to its goal of achieving an annual run rate of $1.2 billion.
However, the company did say it expects to have restructuring charges in 2018 that will be between $635 million and $888.6 million.