Swedish telco equipment maker Ericsson is likely to cut jobs as it accelerate plans to trim A$1.3 billion in costs amid narrowing profit margins, and a general market slowdown.
Ericsson’s last round of mass layoffs was in 2017, shortly after CEO Borje Ekholm took over the top role.
CFO Carl Mellander told investors yesterday that Ericsson was “attacking cost in a hard way”, by reducing spend on real estate and IT and trimming other overheads.
Its recent acquisition of cloud computing company Vonage will be its last for a while.
“We intend to be cautious on M&A,” Mellander said.
“We’re probably looking more at smaller bolt-on acquisitions, and not any large new acquisitions for now.”
Ericsson’s profit margins have taken a hit, and will only reach the lower end of its 15-18 per cent forecast by 2024, as 5G build slows in the US. Profit margins are traditionally lower in the early stages of an infrastructure build.
Ericsson, who is one of the leading suppliers of 5G technology, forecast annual growth of 11 per cent over the next three years, as newer markets like India step into the 5G sector .
“Some of our customers like in North America are guiding for lower capex following a very fast build out in the beginning of 2022,” Ekholm told investors.
