Displaying items by tag: Q1

US tech giant announces recruitment cutback

Written on Tuesday, 22 January 2019 06:26

US technology giant Apple has announced that it will impose a recruitment cutback - which has been primarily forced due to weak sales on the company’s iPhone devices in the lucrative Chinese market.

Bloomberg has reported that Apple CEO, Tim Cook, announced the recruitment cutbacks just a day after he sent a letter to Apple investors that warned the company was bracing itself for a year-on-year decline in revenue for its fiscal Q1, which would shave $5bn from its guidance. 

In a series of meetings that were held following the disclosure, it was reported that Cook informed some staff that a number of divisions would reduce hiring, but stated that he didn’t think a complete freeze in recruitment would be an appropriate solution to take.

In addition to this, it has been further disclosed that the CEO is also yet to determine which divisions will face hiring cutbacks. However, it is believed that divisions such as Apple’s AI team will not be affected due to the leverage of investment made by the US tech company into the emerging technology.

The move will also not affect plans to open a state-of-the-art new office in Austin, Texas or its expansion plans in Los Angeles, where the company is fleshing out its original video content ambitions.

Bloomberg also pointed out that Apple has hired new staff at a significant rate over the past decade. The company recruited 9,000 workers in its most recent fiscal year, taking the total up to 132,000, while adding 7,000 a year earlier.

Published in Devices

Swedish telecoms equipment giant Ericsson suffered an “unsatisfactory and mixed” Q1, says CEO Borje Ekholm, as the vendor recorded a net loss of SEK10.9 billion ($1.2 billion) and an 11 percent year-on-year decline in sales. Ekholm said during a conference call that the company’s performance has been affected by restructuring costs, as well as a faster than anticipated decline in sales of its legacy portfolio.

Ericsson is going to increase its cost-saving efforts, according to the company’s earnings call which the CEO participated in. He said Ericsson also needs to increase the speed of its new product pipeline and business development initiatives. Ericsson will be assessing its contract procedures and discounts offered to customers, as part of an ongoing business review, to boost its margins.

The network business has been strong despite lower than expected sales, said the CEO, but the decline in Ericsson legacy media product sales and IT and Cloud business segments has made a significant impact. “It was tough, but it was mixed,” said Ekholm discussing Ericsson’s Q1 performance. “We have a very stable networks business that is performing well. We have IT and cloud and media with big significant losses. We are taking actions so we can turn that around and reach our long-term ambitions.”

In January, Ekholm pledged to guide the beleaguered company through what he labeled a “period of intense change”. The Swedish telecoms giant has endured some major setbacks, and was forced to lay off more than 3,000 of its Swedish staff last year. What’s more, the company has been forced to fight off bribery allegations after former executives of Ericsson told the US Securities and Exchange Commission (SEC) that they had engaged in multiple counts of bribery in different regions all over the world in an effort to secure major contracts.

However, Ekholm insisted that under his tenure the company will come through this intensely difficult period, and will emerge as an “even stronger leader” in the industry. In a statement, Ekholm pointed to Ericsson’s position in the development of 5G as a reason to be optimistic for the future, and reiterated his desire to return the company to success.

The company has suffered continued losses, in Q1 reporting SEK13.4 billion of restructuring costs, asset write-downs and what has been described as “provisions and adjustments related to certain customer projects.” Ericsson sales dropped from SEK2.2 billion in Q1 2016 to SEK46.4 billion in the recent quarter.

Ericsson says it is “not satisfied with the cost structure of the company and the existing cost and efficiency program is not yielding sufficient results.” The vendor said in a statement, “Based on current profitability, we will intensify our efforts to reduce cost with focus on structural changes to generate lasting efficiency gains and increase cost competitiveness.”

Eekholm expects the company will make a profit in 2018, with a target to double its underlying 2016 operating margin by 2019. Earlier this month Ericsson said it will “pursue a more focused business strategy to revitalize technology and market leadership, improve group profitability and enable customer success.” The overall strategy is to “enable service providers to expand their business across industries and into new profit pools.”

The company says it will drive the development of market-leading solutions, fully leveraging the potential of 5G, IoT and cloud. Restoring profitability is key for Ericsson and it will start by focusing the portfolio to fewer areas and securing effectiveness and efficiency in operations.

Ericsson also says it will increase emphasis on solutions across the company, combining products and services, to drive efficiency and better meet customer needs and requirements. This will also be reflected in a simplified organization. In parallel, Ericsson will accelerate investments both in R&D and services capabilities in selected core areas to ensure that it can offer customers leading solutions. 

Published in Telecom Vendors

Netflix is reaching a major milestone in its history. The subscription-based video-streaming platform added five million new subscribers globally in the first quarter of 2017, which brings its total subscriber base to about 99 million users. However, the company missed Wall Street and analyst subscription predictions.

“We expect to cross the 100 million member mark this weekend,” said Netflix in a letter to shareholders on Monday April 17. “It’s a good start.”

Netflix CEO Reed Hastings pointed out that Netflix still has a way to go to be ranked among the likes of YouTube and Facebook which boast over a billion users globally. “Our viewing is very large and growing, but nowhere near as big as YouTube,” said Hastings. “We definitely have YouTube envy.”

In order to keep growing as a company, Netflix says it will implement a significant marketing strategy, spending more than $1 billion this year to “drive member acquisition.” The company reached a decision to launch in almost every country in the world and invest heavily in original content to increase its subscriber base.

Netflix original shows such as The Crown, Black Mirror and the Marvel series have been a success for the platform. The company has also invested in exclusive deals with international stars such as Shah Rukh Khan and Adam Sandler to maintain its appeal.

However, Netflix is said to have “disappointed” Wall Street by missing its subscriber forecast. For the quarter ended 31 March, Netflix claimed 98.75 million streaming video subscribers globally, adding 4.95 million new members in the three-month period. But this missed analyst estimates of 5.27 million and its own guidance of 5.2 million. New domestic subscribers for Netflix came in at 1.42 million, versus Wall Street forecasts of 1.59 million, and Netflix’s own guidance of 1.5 million.

Missing the targets has some investors feeling nervous. However, the company did see a 35 percent year-on-year increase in revenue to reach $2.64 billion in this first quarter, which did meet expectations, and EPS was $0.40 per share, which was above the $0.37 that analysts predicted. Wall Street had been modeling for Netflix to earn 24 cents a share excluding items on sales of $2.76 billion.

Global Telecom Holding, the international telecommunications company operating GSM networks in the Middle East, Africa, Canada, and Asia, expects to get 4G licenses in Algeria before the end of Q2 2016. According to the company’s investment report on the business results of Q1, 4G is expected to be commercialized in Algeria by Q3. 4G tender in Algeria was launched in April.

Global Telecom Holding recently released its net profits announcing $87.5 million during Q1 of 2016 compared to a net loss of $54.7 million during the same period of 2015. This increase occurred despite a decline in income to $707.1 million compared to $718.8 million during the same period in 2015. Despite a decline in U.S. dollar incomes, the company explained that there are still positives such as the continuous growth of mobile data income, reaching an annual growth of 87 percent during Q1.

In Algeria, Global Telecom Holding reported that mobile data growth reached 135 percent, compared to Pakistan which only reached 80 percent due to the expansion of 3G services. In comparison, Bangladesh registered growth of only 60 percent.

Looking at Algeria, Global Telecom Holding’s subsidiary company, Djezzy, faced a decline in customers during Q1 of 2016 with an annual rate of 2.5 percent. In fact, the number of customers fell from 17.1 million subscribers to 16.7 million due to the harsh price competition. In comparison, the overall number of subscribers in Global Telecom networks declined to 86.4 million during Q1 of 2016 – a drop from 87.1 million (0.8 percent decline) subscribers during the same period last year.

According to the research department in Beltone Financial Holding speaking about Global Telecom Holding’s results, the improvement of the average profits is attributed to operational performance, the reduction of operational costs, and also the absence of recording currency rate losses. Also pointed out was the decline of Global Telecom’s expenditure during Q1 2016, with an annual rate of 32 percent. This is reportedly because of the launch of 3G licenses in 2015 across its markets.

Published in Finance

Deutsche Telekom posted a surge in first-quarter profits on the back of a divestment, while revenues also showed growth over the three months boosted by its US subsidiary.

The German giant said net profit reached 3.1 billion euros (3.6 billion) for the three months ending March, four times more than a year ago, boosted by the sale to British Telecom of its stake in joint venture EE.

Revenues also rose 5.0 percent to 17.6 billion euros, while underlying profit soared 13 percent to 5.2 billion euros.

As in previous years, the German group's growth was boosted by its business in the United States, where its subsidiary T-Mobile USA expects to sign up an additional 3.6 million subscribers this year alone.

At home, the former monopoly's fixed-line business is continuing to decline, while the growth of mobile usage is weak in a saturated market.

Deutsche Telekom's businesses in eastern and central Europe also showed declining profits, as any gains from a rising base of subscribers were wiped out by its massive investments in infrastructure for the region.

Nevertheless, the group confirmed its targets for the year, expecting a clear increase in revenues and an underlying profit of around 21.2 billion euros.

Published in Finance