Ericsson takes $687 million hit if the change of course in services

FILE PHOTO: The Ericsson logo is seen at the Ericsson headquarters in Stockholm, Sweden, June 14, 2018. REUTERS/Olof Swahnberg/File Photo

STOCKHOLM (Reuters) – the Swedish mobile telecom equipment maker Ericsson book cost of 6.1 billion kroner ($687 million) for the fourth quarter as the cancelling of a failed strategy for the loss-making Business Support System (BSS) unit.

The device provides real-time charging and billing products, and had tried to scale up to help customers with large transformation projects, but said on Thursday the so-called full-stack revenue manager had not generated any revenue.

“The anticipated demand of the customer …is not materialized,” Ericsson said in a statement. “In addition, certain complex transformation projects experienced delays and cost overruns.”

Ericsson said it would accelerate restructuring of the BSS business, which is part of the Digital Services of the business which accounts for about 17 percent of the turnover of the group, and concentrate on its core products, a material decrease of BSS lose in 2019.

The shares were down 4.5 percent by 0930 GMT, a poor performance from the 1.0 percent decline for the STOXX Europe 600 Technology Index.

Ericsson shares up sharply in 2018 as a cost-savings and efficiency program started to yield success in many of the companies after years of crisis, during which, telecom network operators, held in the expenditure.

The company said that it anticipated a further restructuring costs in connection with the planned measures, including the associated headcount reductions of 1.5 billion crowns in 2019.

Reporting by Johannes Hellstrom; additional reporting by Olof Swhanberg; editing by Niklas Pollard and Georgina Prodhan

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