Category Archives: restructure

Ericsson restructures to prioritize cloud market segments

Ericsson is boosting its OSS/BSS activities in LATAM

Swedish networking giant Ericsson accompanied its Q1 2016 numbers with a new company structure and a reshuffle of the executive leadership team, writes

The top-line numbers were pretty much flat year-on-year, as you can see from the table below, with a strong quarter for IPR and licensing revenue offset by a weak macroeconomic environment in emerging markets. spoke to Ericsson CFO Jan Frykhammar to get the inside view.

“Our quarter had its challenges and strengths as always,” he said. “We have a weak macroeconomic environment in some parts of the world, mainly emerging markets. While this is nothing strange after many quarters, even years, of challenges on the macro side, driven by things like oil price and other factors, it’s tough for many of our customers to keep up their investment levels. And then we have lower mobile broadband activity in Europe at the back end of this quarter, including one big customer project that has been completed.

“So we focus on doing everything we can to take care of the things we can control. We continue to deliver on the cost and efficiency programme and we are adding additional measures related to lower volumes. So we’re adapting the company to a challenging environment.”

The restructure essentially splits the company more clearly into its core, legacy, networks business and the areas it has been openly targeting for growth, as follows:

  • Business Unit (BU) Network Products, headed by Arun Bansal
  • BU Network Services, headed by Fredrik Jejdling
  • BU IT & Cloud Products, headed by Anders Lindblad
  • BU IT & Cloud Services, headed by Jean-Philippe Poirault
  • BU Media with central go-to-market model, headed by Per Borgklint
  • Customer Group Industry & Society with central go-to-market model, headed by Charlotta Sund

As you can see both the legacy networks and higher growth cloud segments are sub-divided into products and services, while media seems to be semi-autonomous. The industry and society group is more of a formal sales channel to make Ericson better at targeting industries outside of its core markets, especially utilities, transport and public safety.

“The purpose of this new set-up is to get enough focus, dedicated people and accountability to drive both sales in growth areas and at the same time make sure we remain focused on our core customers,” said Frykhammar. “This business unit structure will also help the market to better follow our progress in these areas. We’ve been talking a lot about targeted areas and now the investment buckets will fall wholly into these new business units.”

The changes to the executive leadership team seem to amount to a refresh, rather than a major overhaul. “The last time we had a major global reorganisation of the company was in 2010 and our industry has undergone a lot of change in that time,” said Frykhammar. “We think this is a good opportunity to bring some new people into the leadership team.”

Frykhammar was keen to stress the ongoing challenges in the broader macroeconomic environment and that Ericsson is acutely aware of them. For a while Ericsson’s quarterlies have been about trying to create a narrative around an essentially flat growth story and the company will be hoping to be able to focus attention on solid growth numbers in the from the cloud and media business when it starts reporting along those lines in Q1 2017.

Hewlett-Packard to decimate its workforce as major split announced

HPHewlett-Packard is to cut 10 per cent of its workforce, which could mean up to 30,000 redundancies, as plans to divide the company in two unfold.

The losses will come when Hewlett Packard Enterprise (HPE) splits from the printer and PC business. The jobs cull will cost $2.7bn to carry out but will save the same amount in running costs every year, says HP.

The new structure proposed by chief executive Meg Whitman would steer HP Enterprise’s focus onto enterprises and government agencies while the PC and printing divisions would concentrate primarily on the consumer market.

Details have not been released about where the job cuts will be made, but Whitman told Wall Street analysts that the plan involves changing the nature of the workforce. The proportion of workers in what HPE calls ‘low-cost locations’ is expected to rise from today’s figure of around 42 per cent to to 60 per cent by 2018.

“We’ve done a significant amount of work over the past few years to take costs out and simplify processes,” Meg Whitman told a meeting of shareholders and Wall Street analysts, “these final actions will eliminate the need for any future corporate restructuring.”

Since the height of the dot com boom in 2000 Hewlett Packard’s stock has lost 60 per cent of its value. However, Hewlett-Packard remains one of the world’s largest technology companies, with revenues this year expected to top $50bn.

Earlier this year HP cut 55,000 jobs. These will not be the last of the job cuts, predicted Charles King, analyst at the Silicon Valley IT consulting firm Pund-IT. “The number is sadly larger than some people might have expected, but I think it’s a reflection of how much trouble HP has been having with its services,” said King.