Ericsson Is Planning To Cut 25,000 Jobs in Brutal Response To Crisis, Report Says (businessinsider.com)

An anonymous reader shares a report: Multinational telecom operator Ericsson -- which carries 40% of the world's mobile traffic on its networks and is Sweden's second largest company by revenue -- reported another disappointing quarter last month. As response, the troubled company's new CEO Borje Ekholm announced costs cuts of 10 billion SEK ($1,25 bn) per year. He did not say how many jobs were at stake. Now insider sources have provided details to Svenska Dagbladet (SvD), indicating that Ericsson's restructuring will be more brutal than expected. The Swedish newspaper reports that there are advanced plans to cut Ericsson's operations by 80-90 percent in some markets, and centralize several European markets. However, the 14,000 employee-strong Swedish work force is to stay intact -- at least all R&D engineers. "Right now, Ericsson is hiring engineers to repair the damage that earlier saving packages caused. It's crucial that most of all the Swedish R&D department remains somewhat protected. They are the ones who will come up with the new solutions that will drive sales in the long term," said a person with insight into the process. According to internal sources, up to 25,000 people may be affected by the restructuring program. The Swedish company currently employs 109,000 people across 110 offices around the world.

Comments

Re:Undo the Damage of Prior Savings Packages

[jellomizer]

The MBA classes that I have took, actually encouraged R&D and making a solid product. The problem is the misinterpretation of the statement that "A companies first priorities are to towards the shareholders" The person who had created that statement actually went on to expand and apologized for it. At the time of that statement a lot of companies were running their business to the grown with shareholder money and just pocketing the money, or putting the money not into the business but towards other causes they may feel they want to put it into. This wasn't meant as a statement to put short term gains over a long term plan, but to make sure the money used for the business is put towards the growth of the business, so the shareholders will be able get payback from their investments.

Often these decisions are also not from some Harvard MBA, but from accountants, who need to report quarterly, which cannot always get a direct correlation of money put into R&D and company profits.