Ericsson plans to cut costs by $1.21 billion by 2017 and will slash jobs as part of that effort, though the vendor did not say how many positions it will cut. The cost cuts are part of Ericsson's larger strategic transformation toward software, media and working with customers that are not telecommunications carriers.
Ericsson CEO Hans Vestberg recently spoke with FierceWireless Editor-in-Chief Sue Marek about the company's transformation from a hardware to a software company, its sudden exit from the modem business and why he thinks 5G will be a reality in 2020. Hot Seat
STOCKHOLM-- On a snowy day in Stockholm during Ericsson's Business Innovation Forum conference, Ericsson CEO Hans Vestberg talked with FierceWireless Editor-in-Chief Sue Marek about the company's transformation from a hardware to a software company, its sudden exit from the modem business and why he thinks 5G will be a reality in 2020. The following is an excerpt of their conversation.
STOCKHOLM--Ericsson's top executives painted a picture of the world in 2020 in which there will be 9 billion people on the planet, 9.1 billion mobile subscriptions and video traffic will dominate, accounting for at least 50 percent of all traffic on the network.
Ericsson reported third-quarter sales that beat analysts' expectations, but falling revenue in the North American market cast concerns over the vendor's forthcoming fourth-quarter results. North America is the company's largest region by revenue and carrier spending in the market has traditionally been a growth driver for Ericsson--but that could be starting to shift.
Ericsson revealed the UK and Germany were the only bright spots in its European sales in the third quarter, as it announced a 13 per cent drop in overall net income compared to the same period in 2013.
Ericsson is exiting the wireless-modem business and will most likely slash about 1,000 jobs as a result. The decision comes as pricing pressure builds in the stand-alone-modem business and more device makers choose to buy system-on-a-chip solutions with modems married to application processors, which Ericsson does not offer.
Ericsson conducted its first demonstration of a new software feature designed to optimise radio performance and cut signalling traffic in conjunction with Japanese operator SoftBank Mobile.
Ericsson reported strong results for the second quarter, with its sales and profit margins beating analysts' expectations. The Swedish vendor expects a better sales and business mix in the second half of this year and is riding stronger growth in network-capacity projects, which are more profitable than network buildouts.
Ericsson grew net income by 76 per cent year-on-year in the second quarter of 2014, as political unrest that affected sales in some of its Middle East and Africa operations was offset by strong sales in China and India.