Huawei ZTE is on the rise, and Ericsson is on the river. In addition to natural disasters is a man-made disaster. There are different opinions. For the Cisco Ericsson layoffs, some people say that the communication world is Huawei's? This argument is as terrible as the fall of Nortel and the reorganization of Noci.
On October 4, Ericsson announced that it would lay off about 3,900 people in Sweden. About 3,000 of them are from manufacturing, R&D and other departments, and another 900 are consultants. Of the 3,900 employees who are about to be laid off, about 1,000 will come from the manufacturing sector, meaning that most of Ericsson's manufacturing operations in Sweden will be cancelled. Currently, Ericsson's Swedish manufacturing business accounts for approximately 5% of its global manufacturing operations.
In July of this year, Hans Vesterberg stepped down as president, CEO and board member of Ericsson. Currently, Ericsson is still looking for a suitable CEO candidate. As early as 2014, Ericsson announced a cost reduction plan of approximately $1.1 billion.
According to the Swedish daily "Svenska Dagbladet", Ericsson closed the final batch of factories and laid off about 3,000 people. The newspaper quoted internal documents that the Ericsson Bros and Kumla factories would be closed, and Ericsson’s 140-year pre-production history in Sweden was completed. Ericsson employs approximately 120,000 people worldwide and Sweden has a total of 17,000.
Ericsson's shutdown of the factory in Sweden and large-scale layoffs are complicated. In addition to the global economic recession and the slow growth of basic telecom operators, most countries in the world have built the most advanced communication networks, especially in the developed countries. China has insufficient market share.
In the first place, ZTE was under pressure in Japan, Europe and the United States in the early years, and it was difficult, but in the backward regions of Asia, Africa and Latin America, Chinese manufacturers have always been eye-catching. As Chinese manufacturing continues to be accepted by most countries in the world, Chinese companies' R&D investment continues to increase, and Huawei ZTE is still expanding in the online market worldwide. Ericsson's long-term position in the high-end market is not enough to cultivate and deploy the market in underdeveloped regions. Therefore, when capacity is shifting to the low-end market, Ericsson is stretched. According to data from global telecommunications consulting firm OVUM, global telecom operators' capital expenditures fell by 5%-10% in 2015. During the same period, Huawei's operator business sales increased by more than 20%, and ZTE increased by 30.2%, while Ericsson and Nokia respectively. It has dropped by 12% and 3%.
In the Chinese market, Ericsson appears to be more passive in the case of a decline in telecom operators' revenue. According to public information, in 2012, there were Cisco products on the Chinese government procurement list, and in 2014, it has slipped out of the big list. In 2008, at the peak of Ericsson's acquisition of Nortel, its revenue reached twice that of Huawei. In 2016, in the 4G market, ZTE Huawei has formed a duopoly position. It can be seen that ZTE's home advantage in China is more obvious.
Ericsson is different. In the second quarter of 2016, the financial report showed that the income was 54.1 billion Swedish kronor, down 11% year-on-year; the net profit was 1.6 billion Swedish kronor, down 26% year-on-year. Ericsson's share price continued to decline, falling 21.7 from the beginning of 2016 to the end of July. %. Affected by this news, in 2010, taking over as CEO Wei Hansi was forced to resign. Wei Shuai took over Ericsson's handsome seal during the peak period and tried to carry out a series of reforms. However, when the 3G/4G dividend is coming to an end, he can only pin his hopes on the 5G business.
Telecommunications equipment giant Sweden Ericsson plans to lay off 3,000 people in the country, accounting for about one-fifth of the total number of employees in Sweden, involving almost all departments such as sales, management, research and development. In recent years, due to increased competition, Ericsson is preparing to cut costs of US$1 billion per year by 2017, due to factors such as the “outbreak†of demand for 5G equipment by telecom operators. Analysts believe that if this goal is to be achieved, Ericsson will need to cut at least 15,000 jobs. Ericsson currently has 116,000 employees worldwide and only 16,000 in Sweden.
In the communications equipment market, Ericsson needs to face strong competition from companies such as Huawei and Nokia. In the past few years, Ericsson has lost ground in this field. As early as 2013, Ericsson's overall sales revenue has been exceeded by Huawei, losing the top five communications equipment vendors (Ericsson, Huawei, Cisco, ZTE, Nokia / Alcatel-Lucent). By the middle of this year, Huawei’s sales revenue has tripled that of Ericsson. In contrast, Ericsson's net profit fell 26% in the first half of this year. After the announcement, the Ericsson CEO, who has served the company for 28 years, announced his retirement. Ericsson's share price has fallen by 25% this year.
However, the simple financial figures have masked the differences in the strategic orientation of the two major communications equipment giants. The strength of Huawei is that it is taking the scale route and attacking multiple lines in the business, enterprise and consumer business areas. Therefore, Huawei is doing addition, and has entered the consumer business field and enterprise field outside the traditional advantage of carrier business. Ericsson is doing subtraction, completely fading out the mobile terminal market and mobile phone chip market, Ericsson focusing on the mobile broadband network, global service business, supporting solution business, and expanding 5G, Internet of Things, cloud Emerging areas such as computing.
Ericsson also said in this layoff announcement that it is working to become a company focused on software and services. The transformation of Ericsson has already begun, and initial results have been achieved. Ericsson's 2015 financial report shows that its services and solutions revenues have already accounted for half of the total, and it has been very different from the past only by providing equipment to generate revenue.
The Ericsson layoffs are mainly concentrated in the two remaining "hardware" production plants in the country.
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