Ericsson CEO confirms additional job cuts will affect U.S. workforce

Ericsson (NASDAQ: ERIC) said it will continue to cut jobs after it posted an 11 percent year-over-year drop in net sales during the second quarter and a hefty 26 percent slide in net profit. And some of those jobs will be in the U.S.

The Swedish telecom gear vendor posted a net quarterly profit of $186 million, down from $240 million during the year-ago period. Sales fell to $6.3 billion, missing analysts' predictions of roughly $6.44 billion, Bloomberg reported.

Ericsson said sales grew in Southeast Asia and Oceania as carriers transitioned from 3G to 4G, and sales in mainland China and network equipment in North America were stable. But carrier investments slowed in major markets such as Russia, Brazil and the Middle East due to "a weak macro-economic environment," Ericsson said, while spending also slowed in Europe as LTE rollouts near completion.  

Ericsson Group CEO Hans Vestberg vowed in an interview with FierceWireless to continue to slash expenses as part of a plan it announced in 2014. The company has eliminated roughly 30,000 as part of that plan in the last eight quarters, he said, and more cuts are in the works.

"Now we are intensifying that cost reduction" with a new plan for additional cuts, Vestberg said. The number of layoffs has yet to be determined, he said, but workers will be affected in every one of the company's markets.

The cuts will include laying off between 3,000 and 4,000 employees in the coming weeks, according to a Svenska Dagbladet report picked up on by Mobile World Live. "There's no market excluded, " Vestberg added. "It's also contractors."

The company will communicate with executives in each market as the layoffs proceed in an effort to work with unions and gain something of a consensus on its plans. The cuts will require more time in some markets than others, Vestberg said. Meanwhile, the company will increase its focus on software sales and businesses that generate recurring revenues. 

Ericsson continues to struggle in a tough worldwide economic environment in which carriers in mature mobile markets have largely completed LTE buildouts and are preparing to invest in 5G over the next several years. Ericsson posted a 2 percent decline in year-over-year sales in the first quarter, prompting a company restructuring and changes to its executive team.

Some have speculated that Vestberg may be facing pressure to step down following back-to-back disappointing quarters. "I can understand there are people having debates," Vestberg said when asked whether he'll be able to remain at the helm. "More important for me is to focus on the company.... I'm focused on executing."

For more:
- see this Wall Street Journal report

Related articles:
Ericsson grows profits despite marginal revenue decline in Q1 2016
Swisscom plans LTE-A Pro launch in 2017 after hitting 1 Gbps in tests with Ericsson
Vestberg says 4G, 5G and software are bedrocks of Ericsson's 2016 strategy
Ericsson: Vodafone NL first in country to launch fully virtualised VoLTE, Wi-Fi calling
Ericsson sees rise in Wi-Fi calling devices after interoperability tests with MediaTek
Ericsson CEO predicts a year of digital disruption

This article was updated July 19 to include additional information from Ericsson's CEO. Mike Dano contributed to this report.

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