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Ericsson restructures and promises more shaking up as revenues drop


via Flickr © Sippeangelo (CC BY-SA 2.0)

Ericsson is continuing to suffer from a general squeeze right across its operations and geographies, turning in disappointing financial results today and getting its response in early.  CEO Hans Vestberg has announced that the ongoing shake-up (Ericsson has already announced swingeing staff cuts to be executed over several years) is itself to be further shaken up with a corporate restructuring and some top executives refreshed.  

The catalyst was further erosion in Ericsson’s quarterly sales, which declined by 2 per cent from the same period last year with gross margins also declining by about 2 per cent.

Most to blame geography-wise was Europe, still ‘weak’ in macroeconomic terms, while North America, China and part of Asia saw a slight uptick to part compensate. IPR licensing was up but Global Services were down.

Conditions at this stage of the cycle are lackluster but competition is still fierce. Ericsson now faces a combined Nokia/Alcatel ensemble in Europe, while ever-growing Huawei casts its usual long shadow from the East. Add to that a sort of double trough now apparent in two of Ericsson’s key markets: the global mobile industry (especially the developed markets) are waiting for uplift from the deployment of 5G (still some years off by most accounts); and just about all of the rest of the network is waiting for NFV to make its promised huge impact.

As one NFV participant told us recently, “nothing  ‘real world’ (as opposed to virtual software) is sold unless the company doing the selling has a solid roadmap to NFV.”

Ericsson has its road map, but the comment indicates just how difficult core equipment sales to carriers must be right now.

There were some apparent executive sacrifices: head of sales Jan Wäreby, Chief Information Officer Anders Thulin and head of Asia-Pacific region, Mats Olsson, have all found positions outside Ericsson. Other executives are being shuffled within the company.

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