Ericsson layoffs (NASDAQ:ERIC) are the talk of Wall Street today after one of the world’s largest 5G network equipment providers announced it will eliminate 1,200 jobs in Sweden, citing lower sales from mobile providers.
What do you need to know about ERIC job cuts lately?
Well, in an announcement this morning, Erikcsson stated it was still in the midst of negotiations with labor unions over the nature of its firings.
Today’s news comes as a followup to earlier warnings Ericcson has offered, noting that its market has dwindled dramatically outside of China, with investment from some operators at “unsustainably low” levels.
“As previously stated, Ericsson expects a challenging mobile networks market in 2024, with further volume contraction as customers remain cautious,” the company said in a statement.
Reasonably so, many mobile carriers have attempted to lower network equipment spending, with Europe in particular proving a particularly difficult region to harness a strong return on investment.
Ericsson also faces strong competition in the form of “open radio access networks” or “ORAN.” This technology allows carriers to use multiple vendors, opening up the market for network parts.
ERIC Stock Slides on Ericsson Layoffs
Predictably, investors haven’t responded well to the news. At the time of writing, ERIC stock is down about 1.5%, contributing to its losses of 13.7% year-to-date. For context, the S&P 500 is up about 10% since the start of the year.
Unfortunately, the road forward looks uncertain for Ericsson, which cut about 9,000 employees last year. Indeed, as North American and Indian 5G equipment sales continue to fall off, companies like Ericsson and Nokia (NYSE:NOK) will likely be forced to make drastic cost-cutting efforts.
“It’s not the first (wave of lay-offs). It won’t be the last,” said Analyst Paolo Pescatore at PP Foresight.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
