Ericsson Splits its Networks Business into Two New Divisions

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Ericsson has announced that it is shaking up its business structure and will be splitting its Networks division into two new segments focusing on radio networks and the Cloud IP services.

Ericsson said that the change in organization will enable it to focus on the needs of each business while maintaining an end-to-end view on the full networks operations.

Hans Vestberg, President and CEO of Ericsson, said, "The business logic and Ericsson's relative position is different in the two areas. Radio is the foundation of Ericsson's technology leadership and we are the undisputed market leader, same size as number two and three together. We are committed to maintain our leadership as the market evolves with 5G. In the cloud and IP space, which are vital for the evolution to 5G, we have made significant progress but are still a challenger.

"In a transforming market we will now intensify our work to capture opportunities in virtualization and cloud, building on our leading position in core networks."

In order to maintain focus on efficiency and end-to-end approach for the full networks operations, a Segment Networks has also been established. The segment, which will comprise the two new business units, will work to ensure continued synergies in R&D, alignment of product portfolio as well as marketing across the segment. Johan Wibergh, currently head of business unit Networks, will assume the role as head of Segment Networks. He will remain a member of Ericsson's Executive Leadership Team.

Johan Wibergh said: "My six years at the helm of Networks have been exciting and now I am looking forward to support both BU's to a leading position continuing to secure that we capture synergies while also assuming a more corporate role. A top priority for me initially is to ensure that we keep momentum in current business while we make the transition."

The two new organizations are estimated to be effective on July 1, 2014 with the BU Management team and organizational structure in place.

The changes are not expected to have any meaningful impact on this year's financial results.

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