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Businesses The Almighty Buck

Ericsson Is Planning To Cut 25,000 Jobs in Brutal Response To Crisis, Report Says (businessinsider.com) 96

An anonymous reader shares a report: Multinational telecom operator Ericsson -- which carries 40% of the world's mobile traffic on its networks and is Sweden's second largest company by revenue -- reported another disappointing quarter last month. As response, the troubled company's new CEO Borje Ekholm announced costs cuts of 10 billion SEK ($1,25 bn) per year. He did not say how many jobs were at stake. Now insider sources have provided details to Svenska Dagbladet (SvD), indicating that Ericsson's restructuring will be more brutal than expected. The Swedish newspaper reports that there are advanced plans to cut Ericsson's operations by 80-90 percent in some markets, and centralize several European markets. However, the 14,000 employee-strong Swedish work force is to stay intact -- at least all R&D engineers. "Right now, Ericsson is hiring engineers to repair the damage that earlier saving packages caused. It's crucial that most of all the Swedish R&D department remains somewhat protected. They are the ones who will come up with the new solutions that will drive sales in the long term," said a person with insight into the process. According to internal sources, up to 25,000 people may be affected by the restructuring program. The Swedish company currently employs 109,000 people across 110 offices around the world.
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Ericsson Is Planning To Cut 25,000 Jobs in Brutal Response To Crisis, Report Says

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  • by fACTOR ( 2795 ) on Thursday August 17, 2017 @10:15AM (#55033775)

    Ericsson is not a telecom operator, but a telecoms equipment company.

  • by Anonymous Coward

    ericsson has a management problem , not an employee problem , i worked for them for 3 years , was originally hired as a full hire but they fucked me up in my contract mot making me a full employee , i.e treating me as a consultant but at the same salary as full hires and no socials being renewed at 3 months period , they ended up dismissing me when i asked they either titularise me or give me my consulting fees as an independent , i am a single parent and i told them straight off on the first phone calls t

    • Your socials are covered by the collective agreement and th swedish government. Those who are able to negotiate private health insurance are key positions not the average worker. If you have to take care of your kid it pays about 80% of your salary and it's no biggie and you are as a male encuraged to take parental leave (for no other reason then to spend time with your kid) under a very generous system.

    • Re: (Score:2, Insightful)

      by farble1670 ( 803356 )

      Being a temp, asking for FT employment, and getting rejected is not being "f***** over". As a temp you either endear yourself to your employer and make your indispensable, or you don't. You didn't.

  • Swedish unions save there jobs the us office H1B's to cut costs.

    • Actually Ericsson has employees with work permits, however to get one you must have an offer of work with conditions that are not worse than the collective agreement or what's common on the swedish labour market. As Ericsson has a collective agreement they can not (easily at least) dump wages. As others have noted layoffs in Sweden is cheap and engineer salaries are lower than for example germany.

  • Without collapsing? Either they've got some Amazing automation coming online or their gearing up for a buy out. Either way the employees are gonna get screwed.
    • by Shatrat ( 855151 )

      It's like hypothermia. They have to cut off the extremities or die in the short term. Hopefully if they retain their core R&D they can ride the 5G wave. If they do not put R&D first right now, Huawei and Nokia will crush them when 5G rollouts start.

      • No Swedish jobs affected (where most r&d is made). They centralize sales and get out of support contracts they are doing at a loss. This is as far as reports go, very little has been said officially except for the no swedish jobs affected.

  • Uhm, I'm surprised they still have that many employees.
  • May be the secret to a Swedish companies success lies in very creative names like Ansglilja, Applaro, Klasen, Graslok Nunnerort with lots of double dots over O and tiny circles on top of A liberally sprinkled.
  • But cell phone providers (aka Telecomm oligopoly) are making so much money right now, that they don`t feel the pressure to buy new equipments or provide better services. They don't care. When they are ready to invest, Ericsson will be well positioned.
  • by mspohr ( 589790 ) on Thursday August 17, 2017 @12:40PM (#55034851)

    Telephone Sanitizers
    (HHGTTG ref)

  • by ErichTheRed ( 39327 ) on Thursday August 17, 2017 @12:54PM (#55034929)

    I mean, I get that Ericsson probably saw they need to get going if they want to be part of 5G and future telecom equipment rollouts....but I have NEVER heard a CEO, even of a technology company, acknowledge that they haven't spent enough on R&D. At least lately, R&D has always been a cost that had to be minimized in any way possible. Anything outside of a 3-month timeframe is completely off the table at most companies; it has to affect this quarter's numbers or it's totally invisible.

    At least in big US corporations, I blame this on the MBA grooming cycle. MBAs are taught that they can manage anything using metrics and spreadsheets, and that they need no knowledge of the actual business processes they're managing...it's enough to be able to run the numbers. Add to this the fact that an MBA gets you an immediate management job at most companies, even if you've never done the work before or know anything about the company. And on top of that, the truly elite business schools graduate MBAs who haven't really had to work or get any real-world experience. It's Harvard MBA --> McKinsey --> VP job at a high-end McKinsey customer, with no stops in between. I've seen this happen in a couple of large companies - you get people who have no clue what's going on unless there's a dashboard telling them some metric is out of spec.

    I wish more companies would admit mistakes like Ericsson is doing and try to focus on something other than the share price...but I'm not holding my breath!

    • There is another path:

      MBA -> VC firm -> CEO of VC dependent company.

    • MBAs are taught that they can manage anything using metrics and spreadsheets, and that they need no knowledge of the actual business processes they're managing

      Can someone with an MBA comment on whether or not this is true?

  • by LeftCoastThinker ( 4697521 ) on Thursday August 17, 2017 @01:13PM (#55035023)

    "Right now, Ericsson is hiring engineers to repair the damage that earlier saving packages caused. It's crucial that most of all the Swedish R&D department remains somewhat protected. They are the ones who will come up with the new solutions that will drive sales in the long term,"

    In other words, the last CEO was a typical MBA jackass who cut engineering/R&D as a short term cost savings measure, and now they are paying a huge price (~25% layoff based on 100k employees). It never ceases to amaze me how many CEOs view R&D as overhead, and cut those employees willy nilly and then laugh all the way to the bank when they pull the ripcord on their golden parachute in 5 years as the company tanks because they don't have any products to compete because they starved their pipeline to fatten the C-level executive bonuses. (A karmic law that will never be passed would be for management bonuses to be impounded for 5 years and distributed to any employees laid off for 5 years after the bonus is paid.)

    The root cause of all this stupid is the practice of paying CEOs more than god in salary and bonuses for what amounts to a relatively simple job (look at the market, competition, position and guess where to go/what to do next). Regardless of what the CEOs might say, most larger, established companies would probably do better being guided by a simple algorithm that looks at maybe 15 key factors and then decides if the company should expand, how many new products to pursue etc. and then let market research and engineering feasiblity studies guide what products are selected using a Pugh study.

    CEOs are fast becoming the emperor with no clothes and are in the same category as fund managers (hint: you are better off with an index fund, since fund managers are about as good as throwing darts at a wall). Companies need to come up with a similar, stable form of governance to an index fund.

    Most real work is done by lower management, HR, sales, sales research, etc. "Vision" might be marketed by CEOs as some ineffable thing, but most companies would do a lot better long term hiring someone internally for $300k/year who knows WTF the company is in the business of doing.

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