Ericsson made wholesale changes in 2017 including a reduction in workforce, as sales decreased by 10 percent due to a continued decline in LTE orders.
“We continued to execute on efficiency improvements with a net reduction of 10,000 employees and external workforce in the quarter,” said Börje Ekholm, president and CEO of Ericsson.
In the fourth quarter, sales declined by 7 percent year over year. YoY. For 2018, the Radio Access Network (RAN) equipment market is expected to decline by 2 percent, compared with estimated 8 percent in 2017. The Chinese market is expected to continue to decline due to reduced LTE investments, while there is positive momentum in North America.
“During a challenging 2017, we have developed and started to execute on a focused strategy, strengthening our R&D while at the same time introducing robust measures to reduce cost and commercial risk,” Ekholm said. “We have now laid the foundation for achieving our financial targets.”
Segment Networks showed “stable performance” with the ramp of Ericsson Radio System (ERS), representing 71 percent of radio unit deliveries in the quarter. Networks adjusted gross margin increased to 36 percent YoY and the success of 5G-ready portfolio continues.
“In the quarter, we made deliveries related to our market share gain in Mainland China and we signed several break-through contracts, including with Verizon and Deutsche Telekom,” Ekholm said. “We have continued to increase our R&D efforts to safeguard a future leading portfolio and to significantly improve our gross margin.”