Ericsson insists there’s nothing new in ‘brutal’ job cuts story

A Swedish newspaper reckons Ericsson’s latest round of cost cuts could affect 25,000 people but it’s mainly conjecture and Ericsson says the specifics are still undecided.

Svenska Dagbladet published a story (in Swedish) that appears to characterise the likely round of job cuts resulting from Ericsson’s continued drive to achieve profitability as ‘brutal’. It then did some back-of-a-fag-packet calculations to conclude that up to 25,000 Ericsson employees are likely to be affected by the drive, which doesn’t necessarily mean redundancy.

Ericsson’s response, which was apparently also sent to Svenska Dagbladet, is to point out that it detailed the fresh round of cost cutting a month ago during its Q2 earnings announcement. In response to some of the specifics of the story the Ericsson statement says it’s too early to talk about which business units and countries will be affected. It’s worth noting that this isn’t the same as saying the report is wrong, only that the plans have yet to be finalised.

“Ericsson has previously communicated that a key component in the company’s focused business strategy is to reduce costs and increase efficiency,” said the Ericsson statement. “In connection with the Q2 report 2017, Ericsson communicated that the company, in light of the current market outlook, will accelerate the planned actions to ensure that the target of doubling the 2016 operating margin beyond 2018 can be met.

“Actions will be taken primarily in service delivery and common costs, but do not include R&D. The plan is to implement cost savings with an annual run rate effect of at least SEK 10 b. by mid-2018, of which approximately half will be related to common costs.

“Ericsson has not communicated which specific units or countries that could be affected. It is too early to talk about specific measures or exclude any country. As Ericsson executes on these plans to save costs, the company will communicate this, and to what extent employees could be affected.”

As far as it’s possible to accurately derive from a Google translation of the article, the suggested cuts are likely to be restricted to non-Swedish operations and Ericsson is even having to hire some engineers to compensate for excessive culling, according to an anonymous source. Another source alleges that internal support for CEO Börje Ekholm is diminishing.

Elsewhere Ericsson is looking to raise a few krona by suing French/Chinese smartphone maker Wiko for allegedly infringing a bunch of patents. We’re told this has been going on for years despite negotiations going on since 2013 and now the time has come to escalate things.

“Global sharing of technology and open standards are the force behind the smartphone revolution and have allowed new entrants, such as Wiko, to quickly build successful businesses,” said Gustav Brismark, Chief Intellectual Property Officer at Ericsson. “This ICT eco-system only works, however, if all market players respect the basic rules of FRAND licensing. It is unfair for Wiko to benefit from our substantial R&D investment without paying a reasonable license fee for our patented technology.”

If Ericsson wins maybe that will save a few jobs.