Telecom network vendor Ericsson today said it is expecting to generate approximately SEK 3.5 to 4.5 billion in restructuring charges during 2015-2017 against an earlier estimate of SEK 3 to 4 billion.
Half of the savings will reduce Ericsson’s operating expenses (OPEX) and the other half will impact cost of sales (CoS).
Ericsson has already stopped modem operations, closed down the supply site in Katrineholm, Sweden, and reduced headcount as part of the cost and efficiency program announced in November 2014 to save SEK 9 billion during 2017.
“We are continuing our journey to transform Ericsson into a leading ICT player, building on our leadership in our core business and extending into targeted growth areas,” said Ericsson CEO Hans Vestberg.
The partnership with Cisco announced on November 9, will be generating $1 billion or more in additional sales by 2018.
Ericsson aims to excel in core business such as radio, core and transmission, and telecom services, while it wants leadership in targeted areas like cloud, IP networks, TV and media, OSS and BSS.
For 2015, rolling four quarters, the total sales in targeted areas amounted to SEK 45 billion against SEK 35 billion.
Ericsson estimates that the total network equipment market during the years 2014-2018 will show a CAGR of 1 to 3 percent. The telecom services market is estimated to show a CAGR of 3 to 5 percent. The market for support solutions is forecasted to grow at CAGR of 7 to 9 percent. Market growth in targeted areas is on average estimated at CAGR 10 percent.
Ericsson aims to grow faster than the projected total addressable market CAGR of 2 to 4 percent in 2014-2018, including growing faster than the market in targeted areas.
Baburajan K
editor@telecomlead.com
