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10,000 jobs to go after Ericsson profit warning

Financial crisis? So why's Nokia doing so well then?

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A profit warning plus up to 10,000 projected job cuts from Swedish giant Ericsson yesterday provided ample evidence that the company's expansion plans are miscarrying. Earlier this year Ericsson came under fire for its climbing marketing expenses, and now it appears these aren't being translated into sales. Ericsson CEO Sven-Christer Nilsson yesterday blamed "the financial crisis in certain markets" as triggering the need for rationalisation, and although he didn't say where the job cuts would take place, it seems inevitable that the Swedish home territory will be hit hardest. The corporate stand-fast of the last 12 months, 'uncertainty and poor sales because of the Asian crisis,' doesn't altogether wash in Ericsson's case. The company performed strongly in the US digital market last year, but recent Dataquest numbers put Nokia's share here for the first nine months of 1998 at 40.3 per cent, double second place Ericsson's 20.6 per cent. Basically, Nokia has got the marketing and product release schedule right in 1998, and is benefiting hugely as the US digital cellular market explodes. Ericsson has spent a lot of money on marketing, but hasn't got the products out at the right time. The problems of Motorola, which has seen the Vikings swipe its US customers with the switch to digital, must be small consolation to Ericsson. ®

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