Ericsson to restructure after disappointing Q1

Ericsson has announced a major restructuring after the vendor fell short of market expectations with its Q1 results.

The company reported a 49% year-on-year increase in net profit for the quarter to 1.97 billion kronor ($242.6 million), but revenue fell 2% to 52.2 billion krona ($6.4 billion).

Ericsson CEO Hans Vestberg commented that the company is “not satisfied with our overall growth and profitability development over past years,” and plans a series of organizational and structural changes aimed at helping stimulate a turnaround.

As part of the restructuring, the company will divide its overall operations into five business units and one dedicated customer group for industry and society.

The company's core business will comprise two network business units - network products and network services. The network services business will focus on managed services, network rollout and customer support.

Two new IT and cloud business units will also be established, that will also focus on products and services respectively. The final unit will focus on media, including software sales and other offerings to support the company's consulting, systems integration and broadcast services operations.

Vestberg said the restructuring forms part of the vendor's efforts to achieve 9 billion krona in net savings efficiency during 2017.

“The changes we are making will make it easier for our customers to do business with us, whether they are an operator, a media company or from another industry,” he said.

“The changes will also take into account the different characteristics, needs, and pace of each of the businesses we are in. I am convinced this will make us even more competitive and enable us to grow both our company and our earnings.”

Ericsson has not yet revealed whether the restructuring will involve further job cuts on top of the the 2,200 announced last year

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