Ericsson announces further 5,000 job cuts

Ericsson, the world’s largest telecommunications equipment manufacturer, has announced the loss of another 5,000 jobs as part of a SKr10bn ($1.2bn, €920m) cost reduction program, despite reporting better than expected results for the fourth quarter of the year.

The Swedish company, which had 78,750 employees worldwide as of the end of December, on Wednesday said sales rose 23 per cent for the quarter at SKr67bn compared with market expectations of SKr57bn. Earnings per share were SKr1.21, against forecasts of SKr1.09. Shares in Ericsson rose 9.6 per cent on the news.

Carl-Henric Svanberg, chief executive, in a statement said “We have had a solid performance in 2008,” . “Sales grew by 11 per cent with good demand for our entire portfolio and across the world. Professional services have continued to show strong growth. Operating margins, excluding Sony Ericsson, have steadily improved, and our financial position is strong with net cash of SKr35bn.”

But despite the bullish statement, Mr Svanberg cautioned the situation should be expected to deteriorate in 2009.
In response, he said the company will sack consultants and other temporary staff, consolidate R&D sites and make layoffs. This will result in a reduction of the number of employees by around 5,000, of which about 1,000 are in Sweden.

The company had surprised investors with a profit warning in October after some US and European mobile operators delayed upgrades of their 3G networks. It cut 4,000 jobs last year.

Mr Svanberg said that with the recession spreading across the world, it was difficult to predict to what extent spending on consumer telecoms would be affected and how operators would act.

“To date, our infrastructure business is hardly impacted at all, but it would be unreasonable to think that this would be the case also throughout 2009,” he said.


Copyright The Financial Times Limited 2009