String of bad news

The honeymoon for Ericsson’s new CEO Börje Ekholm is over. A string of bad news brought Ericsson’s shares down by 15.6%, the biggest negative reaction to a report since Q2 2002.

For the eleventh quarter in a row, turnover fell organically, now by 16% and all three of the company’s business areas Network, IT & Cloud and Media shrank. Lower software sales brought down gross margins to 30%, adjusted for structural costs – the lowest level for a second quarter during the 2000s and for the third quarter in a row the company reported an operating loss, this time of 1.2 billion kronor.

CEO Börje Ekholm has said that the launch of Ericsson’s focus strategy to regain Ericsson’s leadership meant tackling costs. Now they are to be lowered by 10 billion kronor by next summer. “We need to be in more of a hurry than we previously thought. The ambition is more than those ten, but that is what we must deliver.” There will be staff cuts in Sweden and abroad.