Ericsson has confirmed it will cut additional staff as part of its ongoing transformation into a full-fledged ICT company.
The vendor said reducing headcount was a key aspect for staying on-course to its objective of generating some SEK 9 billion (€973 million) in cost-savings by 2017, as it moves away from its operator-focused business strategy.
As it stands, Ericsson claimed it was currently generating around SEK 2 billion (€216 million) in restructuring charges, but would need to generate an additional SEK 3-4 billion (€324 - €433 million) to accomplish its intended goal within the given timeframe.
To achieve this, the vendor said it would be accelerating its activities in portfolio streamlining and R&D, structural enhancements in IS and IT, as well as service delivery transformation. Ericsson will also look to improve efficiency in its supply chain and administrative structure.
Headcount and external cost reductions were also highlighted as part of the vendor’s cost-cutting strategy, which it said would generate savings on both OPEX and cost of sales. It added the changes would result in CAGR of approximately 10 percent.
Meanwhile, Ericsson said it was targeting Cloud, IP networks, OSS and BSS as some of the areas it was looking to expand into as it moved closer toward the ICT domain. It also announced a new mobile banking service from Tigo Senegal, based on the Ericsson Wallet Platform Solution.
Jan Frykhammar, Chief Financial Officer at Ericsson, said: "The key components of our profit improvement plan are to strengthen core business, build strength in targeted areas while at the same time continue to improve our cash flow. Although we believe OPEX will peak in 2014, we believe we can do more to increase efficiency and reduce cost."
Ericsson’s modem business was the first major victim of the company’s transformation after being given the chop in September, effectively putting the jobs of roughly 1,500 Ericsson employees under threat.
Speaking to European Communications earlier this month, Rima Qureshi, CSO and head of M&A at Ericsson, said that Ericsson was looking beyond operators to address new customers such as TV and media, M2M and enterprise.
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