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Comment by throwaway5959 | Hacker News Reader

> On Monday, the company, which employs more than 105,000 worldwide, announced plans to cut about 1,400 jobs in Sweden.

While Ericsson did not disclose which geography would be most affected, analysts had predicted that North America would likely be most affected and growing markets such as India the least.

The cost cutting will continue until profits improve.

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Ericsson revenue in SEK:

March 2022: 55.06B

June 2022: 62.46B

Sept. 2022: 68.04B

Dec. 2022: 85.98B

Dec. 2022: 7% profit margin, 11.36B operating income, 1.6B net change in cash on hand, 50.32B cost of revenue

Beat revenue in four consecutive quarters, all while dealing with IPR agreements and DOJ provisions. Sales up YoY and full year.

"A dividend for 2022 of SEK 2.70 (2.50) per share will be proposed to the AGM by the Board of Directors."

https://www.ericsson.com/en/press-releases/2023/1/ericsson-r...

> 7% profit margin [in 2022]

A year ago they had 17.3% profit margin, that’s a massive drop that I imagine spurred this decision.

https://www.ericsson.com/en/press-releases/2022/1/ericsson-r...

Oh no, our mythical infinite growth is growing slightly less quickly.

Absolutely bananas thinking.

I mean I agree with you in principle but that doesn't change the fact that as a CEO you are in danger of losing your job if margins compress that much and you don't make a show of doing something about it. Keeping margins up is kind of important if you want to be able to invest in new products and markets and survive as a company into the next generation.

Edit: I was talking about the comment above me conflating wanting higher margins with belief in infinite economic growth. I wasn't making a statement about the morality of Ericsson layoffs nor do I have any insight on their financials. I was simply observing that margins seem to be a thing that investors care quite a bit about.

> if margins compress that much and you don't make a show of doing something about it.

Isn’t the layoff them showing they are doing something about their margin compression?

I truly don’t mean my comments to come across harsh. That’s not my intent and realize families will be harmed by jobless. But there’s not much a company can do to cut costs quickly to boost margins other than layoffs.

Yes, it's crazy, and yet this is how it's supposed to function. Boggles the mind. Solid healthy profits have little value, and companies are forced to think short term rather than long

I don't know about infinite, but Ericsson is in the networking space, and there is plenty of work remaining to be done in that space. In the US, cell service is pretty mediocre, and 5G is still rolling out in major cities. I still routinely find gaps in coverage, or find myself in a populated area with very slow coverage. And this is a developed country, not even speaking of many many countries around the world still building out their networking infrastructure. I suspect this is actually accelerating as many developing countries have experienced good growth in the last few decades.

There may come a time when we hit some kind of steady state, but we're definitely not close now.

As noted in my link, "primarily due to business mix change in Networks and previously announced charges for contract exits and portfolio adjustments in Cloud Software and Services".

If they took that hit and missed significantly on revenue, a layoff wouldn't be as unexpected. To take that hit and then beat on revenue, both quarterly and YoY, and then kick off an 8% layoff, is just corporations being corporations for the sake of it.

> To take that hit and then beat on revenue

Revenues don’t mean anything though.

I could generate huge revenues by selling $100 gift cards for 80 bucks. But I’ll have no profit to show for it.

If their profitability was cut in 1/2 in just 1-years time, it's actually irresponsible for management to not take actions to get costs/margins under control.

Ericsson's effort to have a presence in Silicon Valley has always seemed strange to me since they got so much cheaper engineers closer to their HQ.

I mean, they don't need VC money. Why be in SF.

A lot of related companies (Cisco, Juniper, Palo Alto Networks) are based in South Bay. If you want to hire anyone from those companies or do partnerships with them, you should probably have a bay area satellite office despite the costs.

You can have a sales office or whatever. Having a small RnD office not doing the grunt core stuff anyways won't impress anyone.

Do you disagree with the described strategy? If you think a market is relatively saturated (as I assume the US is from a telecom equipment perspective, especially given growing suspicion of foreign suppliers), wouldn't you allocate your limited resources to markets that have room to grow?

I think the suspicion of foreign suppliers is probably to Ericsson’s benefit in the west.

It’s more anti-non-NATO rather than anti-foreign.

But if Ericsson drops all its US staff, I could see them getting lumped in with the likes of Huawei anyway.

It's actually anti-non-NAFTA, as can be seen in the inflation reduction act.

So the “Inflation Reduction Act” has clauses that restrict one’s choice of vendors???

Probably not if they end up joining NATO (whenever the west apeses the Turkish dictator).

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