Ericsson plans to lay off thousands to cut costs

Wednesday, 15 June 2016 00:00 -     - {{hitsCtrl.values.hits}}

Stockholm (Reuters): Telecoms equipment maker Ericsson plans to lay off thousands of staff this summer and is considering large, additional cost cuts due to slowing markets, newspaper Svenska Dagbladet (SvD) reported on Tuesday citing anonymous sources.

After quarterly profit and sales missed expectations in April, Ericsson said slower network spending in Europe and Latin America would require further cost cuts, but it did not say how big those cuts would be.

SvD said Ericsson was planning to give notice to between 3,000 and 4,000 staff this summer, and that thousands more may have to leave the company later.

Ericsson declined to comment on the report, but reaffirmed it was on track to reach previously announced annual cost savings of nine billion crowns by 2017 compared with 2014 levels.

“This program is on track but more remains to be done before the program is completed,” Ericsson said in an emailed statement on Tuesday and repeated it was adjusting its operations to currently low mobile broadband project volumes.

“In parallel, as announced on April 21, we are implementing structural changes to further accelerate strategy execution and drive efficiency and growth even harder across the company.”

With most of the latest generation of networks already built, especially in developed markets, Ericsson, the leading player in mobile infrastructure, has been struggling to find growth for that part of its business.

Its shares are down 26% year to date, making them the worst performer in the STOXX Europe 600 Technology Index, prompting investor concern about management’s ability to safeguard earnings.

Ericsson employed 115,300 at the end of the first quarter, according to its latest report, down from roughly 116,300 at the end of last year.