The announcement came on Thursday morning. According to the company's press manager Ralf Begner, it is a consequence of competitive pressure in the telecom industry.
The mobile network market is very tough and competitive. The market has not shown any growth while we see inflationary pressure continuing, he told TT and elaborated:
This in turn means that we must continue to work on reducing our costs to ensure our long-term technology leadership. These initiatives will continue throughout the year across the company.
Has 12,600 employees in Sweden
Ericsson has approximately 12,600 employees in Sweden. This means that more than one in ten employees in Sweden will be laid off. Union negotiations have now begun, but the company cannot currently say who will be affected.
It is part of a global initiative. It is always disappointing to have to make decisions that affect employees, and it is very important that we are able to inform those affected first, says Ralf Begner.
What timeframes are we talking about?
I can't say exactly how long it will take, but our ambition is for it to be completed during the year.
Positive tones
According to the union, it all came as a big surprise.
For most employees, this came as a complete surprise. Otherwise there have been positive comments, says Per Norlander.
This is far from the first time he has been forced into negotiations over cuts. He is extra critical this time.
It's a brutal way to do it. This is not good for the company.
It impacts directly on the core business, on research and development, on products we will later bill for, he continues.
Extra dividend
Analysts point out that orders for Ericsson look a bit thinner over the next six months. So, from that perspective, the announcement from Ericsson is not entirely unexpected, according to Daniel Djurberg, telecom analyst at Handelsbanken.
He also speculates that there may not be an extra dividend to the owners, as has been previously discussed, because Ericsson has an unusually large cash reserve. That would be galling for the employees, Djurberg reasons.
Alternatively, Ericsson's board of directors could instead launch a share buyback program, a variant of a share dividend.
Ericsson shares rose a few percent on the Stockholm Stock Exchange.
