Ericsson CEO stands by strategy despite losses - Mobile World Live

Ericsson CEO stands by strategy despite losses

29 MAR 2018

Ericsson’s cost-cutting measures and focus on R&D stabilised the company and provided a platform for future growth, CEO Borje Ekholm (pictured) told investors at the company’s AGM.

The executive, who presided over swingeing cuts in a bid to lower costs during his first 15 months in charge, said he was confident the “strategic choices” made under his stewardship would create a “strong and successful” company over time.

Ekholm added he remained dissatisfied with the company’s financial performance, despite stabilising its network business and acheiving SEK6 billion ($718 million) in cost reductions in 2017. The company booked a net loss of SEK35.1 billion during the year, compared with a profit of SEK1.9 billion in 2016.

His comments on the company’s prospects come amid concerns raised by investor Cevian Capital, reported by Reuters, that cuts were not being made quickly enough. The investor owns a 8.5 per cent shareholding.

Ericsson plans SEK10 billion of annual savings by mid-2018, compared with its costs at the start of 2017.

Since taking the helm in early 2017, Ekholm has slashed jobs and refocused the company on perceived growth sectors in a bid to offset the decline of its traditional networks business. Ericsson also wrote down the value of its digital services unit and reorganised its businesses, including its broadcast and media units, which had been widely tipped for a sale but was later kept by the vendor.

“In 2017 we stabilised and simplified the company,” Ekholm said, adding: “We took out significant costs, and invested in the future. We have a clear strategy and clear targets for turning Ericsson to profitability and a strong long-term development.”

5G pace
Despite the company’s continued focus on slashing costs, it pumped investment into 5G-related R&D as it looks to gain a foothold in the market for equipment to deliver the new network technology.

Ekholm said the development of 5G had been “faster than expected” and was now a commercial reality. He added the company was “well positioned” having already signed a number of 5G contracts and, as devices became available supporting 5G, the sector would gain momentum.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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