The Ericsson manager’s uncertain outlook is characterized, among other things, by the fact that the operators are expected to remain cautious when it comes to investments in their networks.
– There is a decline in the rollout rate, says Börje Ekholm on the phone from Canada.
In addition, customers have built up larger stocks than normal, to protect themselves against the supply disruptions that characterized the market after the covid pandemic. They are now used more widely.
Dramatic
– We get a pretty big drop in sales there, says Börje Ekholm and adds:
– But overall, despite the drama in our business mix, we are unchanged in our total sales, he continues and points out that it was in line with what management had expected when the quarter began.
Sales nevertheless rose, boosted by, among other things, positive currency effects and company acquisitions, during the first quarter by 14 percent to SEK 62.6 billion compared to the same period last year. Profitability fell but was still better than analysts had expected.
Despite that, the share price plummets, down six percent when the stock market opens.
“On the other hand, Ericsson expects the second quarter to be on par with the first quarter. This means that they are lowering their expectations for the second quarter, which is normally about ten percent better than the first quarter, both for earnings and sales,” writes Ericsson analyst Inge Heydorn, fund manager at GP Bullhound, in a comment.
Thousands of employees gone
In the report, the Ericsson management writes that they aim for cost savings of eleven billion kroner this year. That is two billion kroner more than previous assessment. Börje Ekholm does not want to go into where and how the savings will be found.
– It is across the entire organization, it also includes research and development, he says.
Ericsson has already negotiated a package with the unions where 1,400 jobs will disappear in Sweden. In total, it will be about 8,500 fewer employees globally. How much higher those numbers will be, Ekholm is currently keeping secret.
