Recently, Huawei and Ericsson, the two global telecom equipment manufacturers, have released the latest financial reports. Among them, Huawei's revenue in the first half of 2016 reached RMB 245.5 billion (about US$36.7 billion), which is growing compared with the same period in 2015. 40%, Ericsson's revenue in the first half of 2016 was 106.3 billion Swedish kronor (about 12.3 billion US dollars), but it was down from 112.4 billion Swedish kronor in the same period of 2015. This shows that Huawei has continued to attack the city in recent years against Ericsson. The resulting threat has led to a shift in the performance of the world's two major telecom equipment vendors.
According to foreign media reports such as Nasdaq, Huawei did not announce net profit in the first half of 2016. Ericsson's net profit for the first half of the year was 3.7 billion Swedish kronor, which was the same as in the same period of 2015. Under the pressure of Ericsson's overall poor operating results and major shareholder retreat, Hans Vestberg, who has served as CEO of Ericsson since 2010, also stepped down after the release of the latest earnings report. Ericsson's board of directors appointed the current chief financial officer, Jan Frykhammar, as interim chief executive.
In fact, the Ericsson board of directors has considered the removal of Vestberg for some time, and this time the final decision was made. Leif Johansson, chairman of Ericsson, pointed out that it may take several months to find the next CEO to replace Vestberg, and alluded to the CEO change to find a new strategy that can create growth and value. Previously, Vestberg’s overpaid salary and travel preferences had been criticized for taking on private business jets.
Vestberg has been in Ericsson for 28 years. A few years ago Vestberg developed a strategic plan to drive Ericsson's transformation. Ericsson has just completed organizational changes in order to improve operational efficiency and cost savings. In the first half of 2016, layoffs were made8. 000 people, and will gradually reduce R & D investment, in order to further reduce the scale of cost expenditure in 2017. Ericsson will even abolish more employees in the future, and has also carried out several layoffs in the past few years.
Ericsson has implemented a new organizational structure since July 1, aiming to strengthen the accountability system, accelerate the implementation of development strategies and adapt to the customer's work model. But even if Vestberg made a lot of business reforms before, Ericsson shareholders apparently still believe that Vestberg's reform efforts are not enough, and Vestberg lost patience, so it is sooner or later that Vestberg leaves Ericsson.
This highlights Ericsson's reforms in addition to layoffs, organizational effectiveness and cost-saving strategies. It is still necessary to take a stronger prescription to effectively lead Ericsson to further strengthen its competitiveness with Huawei. In the past few years, Huawei has adapted its strategy and continued to change. The rapid growth in the market has gradually suppressed the growth of Ericsson's performance. Now the revenue gap has tripled.
In the past few years, in the global telecom equipment market, the overall demand has slowed down and the new competitive situation has intensified, which has reshaped the appearance of this market. Under this trend, some large-scale acquisitions have emerged. Ericsson has also passed In a deep alliance with Cisco (Cisco) to respond to this market pressure, the two companies agreed to cooperate in the field of research and development.
With the departure of Vestberg, it means that Ericsson may launch a larger change in the future, in response to the high level of competitive pressure from rivals such as Huawei and Nokia at this stage. The continued strong Huawei is the face of Ericsson. A huge competitive challenge. In the first half of 2016, Huawei's consumer business revenue reached a record $77.4 billion, an increase of 41% year-on-year. In the same period, smartphone shipments reached 60.56 million, an annual growth of 25%. As a result, it can be seen that Huawei's general consumer business continues to grow steadily in the global market.
In addition, Ericsson is still facing a series of US government investigations into the company's past business, but there is no indication that Vestberg is involved in any of Ericsson's investigations.
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