Ericsson AB's turnaround effort further took its toll Wednesday, as the Swedish telecommunications-equipment giant said it cut 10,000 jobs in the fourth quarter and said two top executives would leave.
The company, battling fierce competition and weak spending, announced the job cuts -- made up of staff and contractors -- as it reported its fifth straight quarterly loss. Its shares were down 7% in midday trading in Europe.
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Ericsson reported a net loss of 18.9 billion Swedish kronor ($2.4 billion) for the fourth-quarter, compared with a 1.6 billion kronor loss a year ago, mostly because of asset write-downs announced two week ago.
Revenue declined to 57.2 billion kronor, from 65.2 billion kronor in the same period a year earlier, partly because of weaker spending by Chinese wireless carriers.
Long a leading maker of equipment for cellular towers and related infrastructure, Ericsson has struggled in recent years amid increased competition, especially from Chinese rivals, and an industrywide spending lull.
Ericsson's major customers are wireless carriers, which largely already have all the equipment they need. They aren't expected to increase spending until the next generation of wireless technology, called 5G, is widely available in a few years.
Since 2012, Ericsson has fallen from first to third place in the $126 billion market for telecommunications equipment and software, according to IHS Markit Ltd. China's Huawei Technologies Co. in 2016 led with a 20.4% market share. Finnish rival Nokia Corp. acquired Alcatel-Lucent to leap into second place, with 14%. Ericsson had 12.5%, while China's fast-rising ZTE Corp. had 9.2%.
Ericsson said it cut about 17,000 jobs, of both employees and contractors, in 2017 overall. Ericsson's employee count stood at 101,000 in December, compared with 117,000 in June 2016.
"We view 2017 as a very challenging year," Ericsson Chief Executive Borje Ekholm said at a press conference Wednesday. He added that the fourth-quarter financial results were "not acceptable, but it's expected."
Mr. Ekholm became CEO in January 2017 and, months later, announced a turnaround strategy that included cutting costs, focusing on its core business of selling telecommunications equipment and exploring sales for its other businesses. On Wednesday, Ericsson said it had sold 51% of a unit that helps TV broadcasters to private-equity firm One Equity Partners. The two sides didn't disclose the deal's value.
Mr. Ekholm on Wednesday also announced his third management shake-up since he took over, with the company's digital-services head and public-affairs chief both set to leave their positions Thursday.
Citi analyst Amit Harchandani said Ericsson's core business of selling telecommunications equipment performed worse than expected last year, while the company spent more on research and development than anticipated. The turnaround appears to have "moving goal posts," Mr. Harchandani said. But he added that "the long-term turnaround" is on track after Ericsson cut costs and sold a business.
For the full year, Ericsson generated revenue of $25.6 billion, down 10% from 2016, and warned 2018 will be another difficult year. Mr. Ekholm's plan calls for Ericsson to bringing in $24 billion to $26 billion of sales in 2020, with an operating margin between 10% to 12%. For 2017, its margin was negative 18.9%, compared with 2.8% in 2016.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
January 31, 2018 06:49 ET (11:49 GMT)
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