Stockholm- Ericsson will book as much as 15 billion kronor (R21.44 billion) in extra costs in the first quarter as new chief executive Borje Ekholm pares operations at the wireless network supplier after four straight quarters of falling revenue.
Ekholm, in his first major operational moves since taking over in January, is whittling down Ericsson’s structure to cope with a prolonged industry slowdown.
He’s considering a sale of the media business that was a favourite of his predecessor, and a unit that sells hardware for cloud computing, while eliminating a management layer and halving the number of regional divisions to five.
“We have been spreading ourselves too thinly, which has led to our market and technology position being challenged,” Ekholm said on a conference call on Tuesday.
Read also: Ericsson posts fourth quarter loss of $181m
“Today is the first step in a strategic repositioning of the company.”
Brought in 10 weeks ago by the Wallenberg family, Ericsson’s largest shareholder, Ekholm is embarking on a mission to right the ailing network-equipment maker amid fierce competition and a spending slowdown.
The Stockholm-based company said yesterday that its earnings this quarter will be cut by 7 billion kronor to 9 billion kronor, because of cost overruns in a few large projects.