Amid a drop in the overall sales, Swedish vendor Ericsson plans to go for a corporate restructuring, announced the company in a statement.
“We are not satisfied with our overall growth and profitability development over past years. We are today announcing further actions to accelerate strategy execution and to drive efficiency and growth across the company even harder. We will create a leaner, more fit for purpose organization … As 5G, the Internet of Things, and Cloud drive the next phase of industry development, the time is just right to make these changes,” said Ericsson CEO Hans Vestberg in the statement.
Ericsson’s sales fell by 2%, to 52.2 billion Swedish kronor ($6.5 billion), compared with the same period last year. But, the net income has increased by 45% and reached SEK2.1 billion ($260 million), over the same period.
Although Ericsson has reported modest sales in the recent years, the company faces a threat from the growth of Huawei, whose communications service provider business overtook Ericsson to become the world’s biggest in the previous year. Similar is the challenge from the Nokia Corp., which completed a takeover of Alcatel-Lucent earlier this year.
“Ericsson was facing a weak macroeconomic outlook in many of its countries and that the rollouts of 3G and 4G networks in emerging markets were happening at a slower pace than in previous years,” Vestberg said.
Owing to the new developments, Ericsson has planned to do some executive shuffles. Senior Vice President Rima Qureshi, who was previously the head of group functions strategy and head of mergers and acquisitions, will become the chief strategy officer and head of the North American region.
Angel Ruiz, who headed the North America will take a departure from CEO Hans Vestberg’s Executive Leadership Team (ELT). However, he’ll continue at Ericsson with the title of the chairperson of the North American and Latin American regions.
Arun Bansal, formerly head of the radio business unit, will become the head the network products. Ericsson’s former head of support solutions Per Borgklint will be named as the chief innovation officer and will head a new business unit for media.
Anders Lindblad, who was previously head of Business Unit Cloud & IP, will hold the position of senior vice president and head of Business Unit IT & Cloud Products. Elaine Weidman-Grunewald will become the head of sustainability and corporate responsibility.
Ulf Ewaldsson will continue in his role as CTO.
The new structure is set to come into effect from a reporting perspective on January 1, 2017.
Ericsson’s reshuffling comes shortly after the company announced a major teaming with Cisco to sell combined products and services to the telecom market. This collaboration has not made much impact on its financial outcomes.
According to Ericsson, it would spend another SEK1 billion ($120 million) on restructuring charges this year, up from the SEK3-4 billion ($370-490 million). Despite the restructuring charges, the company targets net annual savings of SEK9 billion ($1.1 billion) in 2017.
The company has not mentioned anything about additional layoffs yet. Ericsson, which employs about 115,000, cut around 6,000 jobs last summer.