Ericsson to Cut 10% of Irish Workforce

Ericsson is cutting 130 jobs in Ireland as part of a wider cost-cutting program aimed at boosting profit margins.

The cuts, which were confirmed by an Ericsson AB (Nasdaq: ERIC) spokesperson today, will affect nearly 10% of the Swedish vendor's Irish workforce.

The news comes as Ericsson targets a 10 billion Swedish kronor ($1.23 billion) reduction in annual operating costs by mid-2018 and follows earlier reports that it plans to cut a total of 25,000 jobs, or about 23% of its entire global workforce at the end of June. (See Ericsson Plans 25,000 Job Cuts – Report.)

Under CEO Borje Ekholm, who took charge of the company at the start of this year, it is trying to boost its operating margin to about 12% from a low level of just 6.7% in 2016, after restructuring charges were excluded.

In an email to Light Reading, a spokesperson for Ericsson said: "As part of its global restructuring program Ericsson has announced a reduction of around 130 employees from its offices in Ireland. This is to ensure a competitive business model aimed at securing long-term growth and linked to the technology needs of our customers.

"The company remains committed to R&D in Ireland and will continue to employ over 1,200 people in our Athlone and Dublin campuses. Ericsson regrets the impact of today's announcement on our employees and will be providing a comprehensive support program to affected employees."

According to an August report from Sweden's Svenska Dagbladet, company cutbacks will affect staff across multiple European operations and at Ericsson's managed services unit, which employs about 30,000 staff. Employees at Ericsson's R&D unit in Sweden will not be affected by the moves, according to that report.

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Ericsson was earlier this week reported to be considering a merger of its Spanish Abentel business, which provides fiber network rollout and maintenance services, with a Spanish engineering firm called Dominion. (See Ericsson Seeks Merger in Spain to Cut Costs – Report.)

Abentel is believed to employ about 550 members of staff and to report very low profit margins because of high workforce costs.

Ericsson was also this week reported to be cutting about 600 jobs in Italy, where it employs a total of 3,500 people.

The company's spokesperson declined to comment on the rumors about Spain and Italy but confirmed that cuts are now underway in various countries.

Ericsson has been hit by a slump in telco spending and tough competition from Chinese rivals Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). It has suffered a sequence of earnings setbacks and reported a net loss of SEK1 billion ($120 million) in the recent April-to-June quarter, compared with a profit of SEK1.6 billion ($200 million) a year earlier.

Revenues fell by 8% over the same period, to SEK49.9 billion ($6.1 billion).

Besides cutting staff numbers, the Swedish vendor is also looking to sell its loss-making media and cloud hardware businesses as it focuses on rejuvenating its core networks business. It has already sold a power modules business to Asia's Flex. (See Ericsson Moves Closer to Media Business Sale – Report.)

— Iain Morris, News Editor, Light Reading