Displaying items by tag: Borje Ekholm
Ericsson President and CEO Börje Ekholm says Ericsson will switch on 5G globally in 2019, backed by a strong, secure and available portfolio.
Addressing media and analysts as he launched Ericsson’s MWC Barcelona 2019 in Barcelona, Ekholm also stressed the role of 5G as a critical national infrastructure, and emphasized the advantages for early adopters.
“We are truly switching on 5G around the world in 2019,” he said.
Ekholm said that Ericsson has announced commercial 5G deals with 10 named service provider customers, as well as 42 memorandums of understanding. The company is already rolling out 5G networks across the globe: in the US, Europe, Asia, and Australia. And he promised more announcements to come.
“Consumers and enterprises are waiting for 5G,” Ekholm said. “According to Ericsson ConsumerLab research, one-third of smartphone users globally will change either immediately or within six months to a service provider that switches on 5G. Today, the US and Asia are leading in 5G development.”
Ékholm said the first commercial scale 5G beneficiaries will be mobile broadband consumers with massive and highly cost-efficient capacity expansions facilitating new applications in augmented reality and virtual reality in areas such as gaming and sports broadcasts.
But he also stressed how 5G would move the industry beyond consumer products and into the industrial internet, citing ongoing collaborations in both mobile robotics and all-electric, autonomous vehicles as examples.
Ekholm also highlighted how Ericsson Radio System hardware has been 5G-ready since 2015 and can be used also for 5G New Radio (NR) with a remote software installation.
This means that Ericsson has already shipped more than 3 million 5G-ready radios to its customers worldwide. Ericsson’s unique spectrum sharing capabilities and common core and dynamic orchestration solutions would put Ericsson customers in the lead with 5G, he said.
“Our unique Ericsson Spectrum Sharing is the most economically feasible way to introduce 5G in existing bands achieving immediate nationwide coverage,” he said. “We can dynamically mix 4G and 5G traffic on the same spectrum. Some said this kind of spectrum sharing was impossible. Wrong! Our engineers are truly world class. With spectrum sharing, our customers have a real 5G frontrunner advantage.”
Ekholm announced that Ericsson intends to acquire Kathrein’s antenna and filters business for mobile networks. This will expand the company’s capabilities and competences in the advanced active and passive antenna domain. Ericsson will be adding around 4,000 highly-skilled professionals in R&D, production and sales based in more than 20 locations, including Germany, Romania, Mexico and China.
Swedish telecom vendor Ericsson has surprised analysts with reduced losses in Q4 driven by the increase of sales revenues and costs reduction. Sales as reported increased by 10% Year-on-Year and sales adjusted for comparable units and currency increased by 4%. Costs related to revised Business Support Systems (BSS) strategy impacted Digital Services operating income in Q4.
Ericsson released a statement on January 16 noting that it will book SEK 14.2 billion (US$ 1.77 billion) in write-downs in its Q4 2017 financial results. The write-downs, Ericsson said, are related to the company’s Digital Services and Other divisions, in addition to an SEK 1 billion charge related to tax changes in the United States.
The announced write-downs did not come as a surprise however, as Ericsson did warn in December 2017 that it would likely book an impairment charge in its Q4 results, which is due to release on January 31, after an internal review following a previously announced corporate restructure.
In the statement, Ericsson said the write-downs will have no “impact on cash flow, but impairments will have negative impact on reported operating income mainly in segments of Digital Services and Other, while tax asset revaluation will impact income tax expenses, in Q4 2017.”
Ericsson said majority of the write-downs are related to goodwill from its Digital Services segment, accounting for SEK 6.7 billion, and SEK 6 billion goodwill from its Other segment. Goodwill refers to a range of non-physical assets such as brand name and reputation, and is often added to balance sheets after the acquisition of another company.
“The majority of goodwill originates from investments made 10 years ago or more, and has limited relevance for Ericsson's business going forward,” Ericsson said in the statement. “All impairments are non-cash accounting adjustments. The adjustments have no influence on Ericsson's commitment to executing its strategies and to investing in technology to support customers' success.”
The company’s Digital Services division is said to be a priority of CEO Borje Ekholm, and is being refocused towards software services to reflect the changing needs of Ericsson customers. Ericsson’s segment referred to as Other includes its media and broadcast units, which the company is reportedly planning to sell.
Other write-downs in Ericsson’s statement include Segment Managed Services: impairment of SEK 0.3 billion of deferred costs related to “termination of certain transformation activities”. In addition, Ericsson’s Segment Networks division recorded impairment of SEK 0.2 billion of “capitalized development expenses related to technologies that are no longer planned to be used”.
The other significant write-down Ericsson announced is the SEK 1 billion charge related to a change in the corporate income tax rate in the United States. The lowering of the U.S. corporate income tax rate from 35% to 21% (effective 1 January 2018) requires a revaluation of U.S. deferred tax assets.
Ericsson said the current estimated impact will be “a non-cash charge to the Group income statement of approximately SEK 1.0 b. that will impact income tax expenses.”
Ericsson admits that the impairments and the tax asset revaluation will impact reported net income in its Q4 earnings report, but insists that it will have “no impact” on the company’s cash flow and cash position. “Ericsson’s gross and net cash position remain strong,” the company said. “An impairment is not an indication of the performance of the business in the quarter.”
Ericsson announced in 2017 that it was restructuring the business, following an extensive cost-cutting program as it seeks to offset the decline of its traditional network business. In Q3 2017, the company recorded a loss of SEK 4.3 billion, which included a restructuring charge of SEK 2.8 billion and a write-down of assets in Canada amounting to SEK 1.6 billion.
"We continue to execute on our focused business strategy," said Borje Ekholm in a statement following the Q3 results. "While more remains to be done, we are starting to see some encouraging improvements in our performance despite a continued challenging market.” He said the “general market conditions continue to be tough.”
Ericsson’s focus on 5G
It’s not all looking downhill for Ericsson. In November 2017, the company filed a landmark 5G patent application in preparation for the next-generation technology. The patent application, which combines the work of 130 Ericsson inventors, is the largest in cellular communications in terms of number of inventors, anywhere in the world.
Ericsson’s Middle East and Africa president, Rafiah Ibrahim, acknowledges that the company has been going through a rough patch, but remains vigilant, particularly in the Middle East and Africa. Speaking to Telecom Review, she said Ericsson has signed MoUs with leading telecom operators to plan for the introduction of 5G.
Helping operators introduce the next-generation technology is one of Ericsson’s focus points moving forward, she said, while also helping operators to monetize existing 4G networks. Rafiah said the company’s experience and understanding of using automation and processes makes it the ideal partner for telecom operators willing to embrace change.
Swedish telecom equipment provider Ericsson published its Q3 financial results on October 20. The company reported a 6 percent year-on-year drop in third quarter revenue which accounted for SEK47.8 billion ($5.9 billion) while the loss was SEK4.8 billion ($590 million), worse than last year’s, reaching $24.5 million.
“We continue to execute on our focused business strategy,” said Ericsson President and CEO Borje Ekholm. “While more remains to be done, we are starting to see some encouraging improvements in our performance despite a continued challenging market.”
Networks showed a slight sales growth year over year. Networks adjusted operating margin was 11 percent. While losses continue in IT & Cloud, said Mr. Ekholm, the company sees increased stability in product roadmaps and projects.
“The general market conditions continue to be tough,” he said. “Sales adjusted for comparable units and currency declined by -3 percent year-on-year. Sales in North America, adjusted for comparable units, currency and the rescoped managed services contract were stable. We also saw growth returning in several countries as operators are increasing their investments in network capacity.”
Mainland China declined for Ericsson as the market is normalizing following a period of significant 4G deployments, representing more than 60 percent of global 4G volumes in the industry. The company managed to increase its LTE market shares in Mainland China to position Ericsson in 5G. However, this will have a dilutive effect on gross margin in Mainland China in Q4 2017, but the ambition is to continue to deliver double digit adjusted operating margin in Networks in Q4 2017.
Sales in Networks grew for Ericsson. Higher hardware capacity sales and a more competitive product portfolio resulted in an adjusted operating margin of 11 percent. The Ericsson Radio System portfolio, accounting for 55 percent of total radio volumes year to date, is proving competitive, Mr. Ekholm said, contributing both to improved earnings and a stronger market position.
In IT & Cloud, sales declined and losses increased in the quarter for Ericsson. The increase in quarter-on-quarter losses is largely due to higher amortization than capitalization of development expenses.
“Our turn-around plan builds on stability, profitability and growth in that order,” said Ekholm. “The initial focus has been on stabilizing both product roadmaps and challenging contracts. We have made good progress in the quarter. However, securing deliveries on large transformation projects puts pressure on gross margin in the near term.”
“The IT & Cloud business is of strategic importance as our customers are preparing for 5G and will digitalize their operations and invest in a future network architecture based on software-defined logic,” Mr. Ekholm added.
Ericsson will now expand its focus to improve profitability through increased efficiency in service delivery. In addition, the company will scale the software part of the business mix and increase the level of pre-integration services, which will lead to a higher gross margin but lower services sales. Positive effects on gross margin are expected in 2018.
“Despite continued decline in legacy product sales, there is good traction in our new media portfolio with several important wins in the quarter,” said Mr. Ekholm. “We have accelerated our efficiency measures and continue to pursue strategic opportunities for this business. Managing our cash is a top priority.”
Ekholm concluded, “We remain fully committed to our focused business strategy. We continue to invest to secure technology leadership and year to date we have recruited more than 1,000 R&D employees in Networks. Customers give positive feedback on both our long-term strategy and on our current 5G-ready portfolio.”
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.
Ericsson says 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 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 also accelerate investments both in R&D and services capabilities in selected core areas to ensure that it can offer customers leading solutions.
"For some time Ericsson has been challenged on both technology and market leadership and the group strategy has not yielded expected returns,” said Börje Ekholm, Ericsson President and CEO. “In our strategy review we have listened carefully to customers around the world and made an in-depth analysis of our portfolio and performance. To enable us to immediately take action and move with speed in execution we are today outlining our path to restoring profitability and to lead with innovation and best in class solutions in areas we have decided to focus on."
Accelerate and increase investments in key areas in Networks to support a continued global rollout of 4G and establishing a leading position in 5G.
Ericsson plans to target the Network Rollout business on its own networks portfolio. Ericsson’s ambition is to optimize the end-to-end offering to address customers' needs. The work to improve profitability in this area will be further sharpened.
For the newly created Digital Services Business Area, including cloud based virtualized network infrastructure and applications, management and monetization software (OSS/BSS) and related services capabilities, the near term focus is on re-establishing profitability for Ericsson. As this area is strategically important to customers going forward, Ericsson says it will also selectively increase its investments to enable the company to be the partner of choice for customers on their journey to become digital service providers.
Ericsson plans to shift the IoT strategy from a systems-integration-led approach to a platform- and solutions-led strategy to better leverage its global scale and industry expertise. It will refocus Managed Services strategy with emphasis on automation, fully leveraging its global scale and OSS capabilities, to provide high-tech services and cost efficient operations. Ericsson will focus on turning business around from a negative result in 2016, addressing low- performing operations and contracts.
The company plans to explore strategic opportunities for the Media business while continuing to develop its media solutions, to enable the business to scale and succeed in the evolving media landscape. Ericsson’s media business consists of two parts, managed services and technology solutions. Ericsson will now create two separate units, Ericsson Broadcast & Media Services and Ericsson Media Solutions, to create a stronger operational focus.
Video traffic today constitutes over 50 percent of mobile data traffic globally, and is forecast to grow to 75 percent by 2022. Ericsson has built a strong and competitive portfolio and become a world leading supplier of TV & Media products and services.
As a consequence of its increased focus on software technology development within virtualized core networks and management and monetization software (OSS/BSS) Ericsson says it will explore strategic opportunities for the IT Cloud Infrastructure hardware business.
Ekholm continues: "With these changes I am confident that we will create the most intelligent and efficient networks, deliver the most competitive solutions and constantly innovate to enable our customers to succeed in a fully connected world."
In addition to the actions above, the company will continue its work to rationalize legacy portfolio and drive company-wide efficiency measures. Combined, these actions will establish a new and stronger earnings level for Ericsson.
Ekholm says: "While we will continue our work to take out cost at high pace with targets surpassing current ambitions, we will not guide on cost levels going forward as it is an isolated part of the profit and loss statement. With the actions announced today, and assuming stable market conditions, we foresee significant improvements already in 2018. And beyond that I am convinced that Ericsson, on a sustainable basis, can at least double the 2016 Group operating margin, excluding restructuring charges. But even more importantly, I think that we can deliver a return on capital employed that will create value for our shareholders."
Ericsson CEO, Borje Ekholm has admitted that momentum towards 5G is now building and that the Swedish telecommunications giant is poised to explore 'unchartered territory' in its attempts to rollout and implement 5G technologies for its customers.
Several vendors have suggested that 2020 will be the year it will introduce 5G technologies to market - and at Mobile World Congress in Barcelona, Ericsson's CEO revealed that his organization was making significant headway.
During his address, Ekholm said that 5G has been a topic branded about for a number of years, but nothing has really happened as of yet. He was adamant, however, that there is now real momentum towards 5G implementation and that Ericsson is at the forefront of this evolution. He said: "Of course 5G has been a buzzword and nothing has really happened, right? But what you are seeing now is the momentum we are building."
Organizations ranging from networks companies to mobile phone makers to semiconductor businesses are united in their efforts to make 5G a reality - and as a result the future of mobile internet has been a key theme and prominent feature of discussions at MWC 2017.
Ericsson's CEO said companies were entering the unknown. He said: "We are entering into a whole new market, in a way (it's) uncharted territory. We are connecting new things, this will require us to enter into new partnerships and new collaborations and new business models basically."
Ericsson endured a difficult number of years with multiple job losses in both Sweden and more recently in Italy - as the organization attempts to reduce costs. In addition to this, Ericsson had to fight a string of bribery allegations which were alleged by former executives. This ultimately led to the appointment of Ekholm as its new CEO in an effort to turn the tide for the Swedish tech colossus.
Ekholm has declared that Ericsson's future will require grit and grace. He said, "At Ericsson we're focused on setting our future direction - but the process will take a lot of grit, grace and huge amount of team work."
Ericsson’s new CEO insists the company will emerge stronger under his leadership, despite a tough road aheadWritten on Tuesday, 17 January 2017 07:44
Ericsson’s newly appointed CEO, Borje Ekholm, has pledged to guide the beleaguered company through what he has 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, incoming Borje Ekholm has 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.
Ekholm said: “As a company and an industry we are going through a period of intense change. Our job is to ensure that Ericsson emerges as an even stronger leader, providing the industry and our customers with superior products, services and solutions. We will ensure that Ericsson remains at the forefront of technological development – across all parts of our portfolio and markets. Our task is to make our customers successful, which in turn will make us successful.”
In addition to the 3,000 job losses in Sweden, Ericsson was also forced to lay-off over 1,000 of its staff in Italy. Ekholm’s appointment brings an end to the six month tenure of interim boss Jan Frykhammar, who took over following the resignation of long-term CEO Hans Vestberg in July last year.
To coincide with Ekholm’s first day as CEO, Ericsson announced it had signed a deal with Vodafone Hutchinson Australia (VHA) with hardware and software to virtualize the operator’s core and IP network. The collaboration between the two is a result of its high-profile Cisco partnership and Ericsson believes it represents the first time the two companies have worked together on telecoms cloud infrastructure for an operator.
VHA CTO Kevin Millroy said the new infrastructure “opens the door to new business models and markets,” citing the development of Internet of Things technologies as a particular aim for the company.
But this is just a small taste of success for a company facing a tough road ahead. Ekholm is a long-time board member at Ericsson, and is taking on the role of CEO at a time when the company saw its share price plummet 35 percent last year amidst steep revenue declines, competition from Chinese competitors, and a slowdown in carrier spending as large investments in fourth-generation wireless gear vastly wound down.
Industrivarden AB and Investor, Ericsson’s two largest investors, pushed former CEO Hans Vestberg out of the company last year after he failed to predict the company’s downturn, missed financial targets, and didn’t react sufficiently to a collapsing market.
Caretaker CEO Frykhammar has done his best to cut costs, but hasn’t offered much clarity for the future of the company. That leaves Ekholm to lead Ericsson to a brighter future. There is hope, seeing as Ekholm once led Investor, the Wallenberg family’s investment company, during a 10-year period when the stock returned almost 300 percent.
At Investor, Ekholm, who is a trained engineer with Swedish and U.S. citizenship, generated impressive returns by updating the portfolio with wholly-owned, unlisted companies that helped to triple the stock price. The man is seen as an impressive executive, but he also sat on the board of Ericsson during the years when it declined, which has led some investors to doubt him, and prefer an outsider option.
In a recent phone interview with Bloomberg, Neil Campling, head of technology research at Northern Trust Securities, shared his opinion of the new Ericsson CEO: “First and foremost he has to rebuild the credibility of the company,” he said. “He has to do that by setting out a clear strategy and clear financial targets, and delivering on those targets.”
In a statement released on January 16, Ekholm said: “We are only at the beginning of the mobility journey as we in coming years will see massive transformation across industries. “Ericsson has shaped an entire industry and led technology developments.”
Ekholm was praised by Ericsson Chairman Leif Johansson in a statement: “Borje has a deep understanding of the business and the challenges Ericsson currently faces,” he said, adding that the CEO “will be able to guide Ericsson on the next steps of the company’s development.”
The most important thing for Ekholm to focus on as the new CEO of Ericsson, is evaluating the company’s costs, product offerings, and competitiveness against rising Chinese market rivals such as ZTE Corp. and Huawei Technologies. As China experiences an economic slowdown, these companies are getting more aggressive in their approach to pursuing business in Europe, which Ericsson will need to watch out for.
Business analysis firm IHS Markit claims Huawei took over Ericsson as the world’s largest supplier of mobile infrastructure in the third quarter of 2016 for the first time. In addition, CK Hutchison Holdings Ltd and VimpelCom Ltd have selected ZTE, not Ericsson, to merge and manage their Italian mobile networks. The deal represents evidence of Chinese suppliers scaling up Chinese operations, and also represents a big blow to Ericsson, which has business with both carriers.
It’s no secret that Swedish telecoms equipment maker Ericsson has been struggling of late. In a bid to revamp the company with a breath of fresh air, Ericsson has appointed Borje Ekholm as the new CEO, betting on familiarity with an executive from its board of directors and its main shareholder.
Early this month, Ericsson announced that it would be cutting up to 4,000 jobs in its homeland of Sweden, proving the company is going through a shaky period. Its former CEO Hans Vestberg stepped down in July after seven years, which further contributed to Ericsson’s instability. The new CEO, Mr. Ekholm, served as president of the Swedish firm Investor, controlled by the wealthy Wallenberg dynasty.
"He has a solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media," said chairman of the board at Ericsson, Leif Johansson. "Having served on Ericsson's Board of Directors for the past ten years, Borje Ekholm has full understanding of the challenges and the opportunities Ericsson currently faces," Johansson said.
In July, the daily Swedish newspaper Svenska Dagbladet cited sources close to the matter in reporting that Investor, which controls 21.4 percent of Ericsson's voting rights, was accused of slowing the restructuring by the other major shareholder, the bank Handelsbanken, AFP reported. Through its pension fund and the fund Industrivarden, Handelsbanken controls 20.1 percent. Sources said the purpose was to lower the share price and encourage Handelsbanken to sell its shares and attract Cisco as a buyer.
"It's really, really surprising. Ekholm was a central figure in the Ericsson Board of Directors and thereby supported the strategy that led to the current crisis," Handelsbanken analyst Daniel Djurberg told TT news agency. Ekholm is set to take office on January 16. He is expected to improve the company's earnings which suffered a net loss of 233 million kronor (24 million euros, $26 million) in the third quarter as operators slowed investments into mobile networks.