Tech Layoffs: Ericsson To Cut 1,200 Jobs In This Country As Mobile Network Market Challenging In 2024

Layoffs: Swedish multinational networking and telecommunications company, Ericsson is facing mobile network challenges with lower volumes. And to curb the challenging environment, Ericsson has proposed to cut 1,200 jobs in Sweden. This measure is part of its global initiatives to improve cost position.

In its statement, Ericsson said, "As part of these ongoing global initiatives, Ericsson now announces a headcount reduction of approximately 1,200 in Sweden. The Company has initiated negotiations with the unions."

Ericsson pointed out that as previously stated, it expects a challenging mobile networks market in 2024, with further volume contraction as customers remain cautious.

Accordingly, in line with managing lower volumes, Ericsson announces proposed staff reductions in Sweden.

It said, "This measure is part of the global initiatives to improve the cost position, including headcount reductions while maintaining investments critical to Ericsson's technology leadership."

Additionally, Ericsson said that the cost-saving initiatives cover various areas such as the reduction of consultants, streamlining of processes, and reduced facilities.

This is alongside Ericsson continuing executing on its strategy to achieve a higher growth trajectory and to reach the long-term margin targets, through leadership in mobile networks and a focused expansion into enterprise.

Initiatives to increase operational efficiency will continue during 2024 but will not be announced separately, it said.

Following the announcement, Ericsson's share price ended at $56.80, down by 1.05% overnight.

As per its annual report of 2023 which was released early this month, the number of employees decreased to 99,952 (105,529). The decrease was mainly related to cost-reduction activities.

Further, in the latest annual report, Börje Ekholm, President and CEO of Ericsson said, the RAN market remained challenged in 2023 and they expect further volume declines. He added, "We are focused on managing what is in our control and relentlessly driving operational efficiency while keeping intact investments that are critical to our future competitiveness. Short-term these investments will put pressure on our profitability, but they will also position us for when the market comes back. Our historic contract with AT&T will start to contribute during the second half of 2024."

Ekholm added, "Through strong strategy execution we have strengthened our competitive position through R&D leadership. On the horizon is the target to make Ericsson a more profitable company by capturing the next major wave of network innovation with a substantial platform business. We remain committed to our long-term targets of 15-18% EBITA2) and 9-12% free cash flow target as the market recovers."

AI is among the key investment areas for Ericsson. Ekholm said, "AI and automation continue to be key investment areas for us. We began investing in AI more than a decade ago and over the next 2-3 years, AI will increasingly be part of our solutions. Recently, we developed our own generative AI framework, leveraging Large Language Models (LLM) that are fine-tuned and optimized for the telecom domain. AI is also shaping the way we operate our company
and we will continue to leverage this technology for internal productivity."

The 5G-services provider Ericsson enables communications service providers and enterprises to capture the full value of connectivity. The company's portfolio spans the following business areas: Networks, Cloud Software and Services, Enterprise Wireless Solutions, Global Communications Platforms, and Technologies and New Businesses.