Ericsson to cut down its software and services division

Ericsson is cutting certain products and will exit certain subscale agreements as an effort to help its Cloud Software and Services business unit reach break-even in full-year 2023 on EBIT/EBITA level. This could refer to customer contracts or deals with suppliers and/or partners.

The Cloud Software and Services unit includes the vendor’s core platform systems, its business support systems (BSS), automation and service orchestration tools, and managed services platforms. Ericsson said the move to shrink its portfolio and exit certain deals will have an impact on its earnings before interest and tax (EBIT) for the fourth quarter of 2022 of 800m SEK ($76 million).

Ericsson CEO Börje Ekholm said, “We have underperformed in this area (cloud software and services) for a long time. But we have also seen a relatively strong improvement compared to 2017 when losses were running much higher than today, so it’s always a journey. We’re not happy at this level. We need to fix this – it should be a profitable business. With our market position and the technology we offer, this has all the potential to be profitable.”

The unit was formed last year as a result of the merger of the vendor’s Digital Services and Managed Services units, and has been losing money for quite a time. The vendor will provide further details about the Cloud Software and Services business unit cuts when it will report its full-year 2022 financials.