Ericsson reorganises to cut costs and drive growth

Over the past number of years Ericsson has made several decisions aimed to build new revenue areas and to drive efficiencies in the core business. This includes exiting the handset and modems businesses, an enhanced partnership strategy on IP, and investments to build targeted growth areas. Hans Vestberg, President and CEO, Ericsson, says: "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, to cater for the needs of different customer segments and to faster capture market opportunities. As 5G, the Internet of Things, and Cloud drive the next phase of industry development, the time is just right to make these changes." The company aims to strengthen its execution through an organizational structure aligned around type of customers and type of business. The new structure will have five business units and one dedicated customer group for Industry & Society, in line with the company focus on core business, targeted growth areas and cost and efficiency. Core business – Two Networks business units, Network Products and Networks Services, will focus on incremental improvements in networks business performance, capturing opportunities in 4G and extending leadership into 5G. Targeted growth areas – The two new IT & Cloud business units, Business Unit IT & Cloud Products and Business Unit IT & Cloud Services, will together with a new Business Unit Media, have a strong focus on profitable growth as a natural next step after a period of investment. Cost and efficiency – The company remains fully committed to drive cost reduction and efficiencies, including delivering on its SEK 9 billion net savings efficiency program during 2017.