Ericsson has cut a total of 18,000 jobs in the last ten months the Swedish multinational said on Friday, announcing Q1 results that beat analyst expectations, with net revenue of 35.6 billion SEK (£2.9 billion) and first quarter losses of £25 million.
Looking ahead, the embattled company expects its rapidly increasing focus on 5G to continue. “We continue to work closely with customers to define the optimal business models to enable them to tap into new revenue streams and capture the full value of 5G” CEO Börje Ekholm said.
“Our efforts to improve efficiency in service delivery and common costs are starting to pay off,” he added in a statement.
The company cited its improvements to cost reductions, the continued effort to push forward its 5G systems and positive progress in addressing poor performing contracts in managed services. It has struggled with falling spending on networks by telecoms operators.
Ericsson reduced its workforce by more than 3,000 in Q1, the company said, which has had a positive impact on cost savings — putting the company on track to reach the savings target of 10 billion SEK by mid-2018.
Ericsson reported cash flow improvements in addition to revenue increases and cost reductions, citing “free cash flow improved to SEK 0.3 (-3.2) b. – another step forward in improving our financial resilience. Net cash was SEK 35.6 (28.3)b.” in a statement.
“The improvements in the quarter are encouraging. However, more work remains to be done. We have confidence in the strategic direction laid out and remain fully committed to our long-term targets,” Ekholm commented.
Cutting costs for the company has not only paid off from a revenue perspective, but the mobile company also saw its shares increase on Friday by 15 percent.
The company also said it intends to gradually increase its investment into IoT, following on from Mobile World Congress (MWC) 2018, which saw Ericsson introduce AI and machine learning to enable networks the company to self-optimise, improve efficiency and deliver better user experiences.
“In Managed Services we continue to focus on machine intelligence, automation and analytics to further enhance user experience, improve efficiency and better manage the increasingly complex networks of tomorrow.”
Furthermore, the company has said it has a solid focus on the development of 5G; rapidly increasing focus specifically on enhanced mobile broadband in a bid to define business models and enable customers to tap into new revenue streams and capture the full value 5G has to offer.
“We continue to increase our R&D investments in Networks to lead in 5G. In Digital Services we continue to increase investments into our new cloud-native portfolio as well as changing our ways of working for better R&D efficiency,” Ekholm said.