Ericsson axes 5,000 jobs

Posts worse than expected losses

Mobile phone giant - Ericsson - is to axe a further 5,000 jobs as it struggles to cut costs amid tough trading conditions.

The job losses are on top of the 20,000 announced by Ericsson three months ago and will bring global headcount down to around 65,000 by the end of 2003.

Today the Swedish company disappointed the market with worse than expected pre-tax losses of SEK3.5bn (£240m) for Q2.

Sales for the quarter hit SEK38.5bn (£2.65bn), down from SEK55.5 (£3.8bn) in the same quarter last year.

The company also fleshed out plans for a rights issue to raise SEK30bn (£2.1bn) in new financing for the company.

Said Kurt Hellström, President and CEO of Ericsson: "In light of our lowered market expectations for this year, we have intensified the cost reductions that we started last year and are substantially ahead of schedule.”

Despite feeling the pinch Ericsson remains convinced that there is a profitable future in global wireless telecommunications.

But it admits that as the market is set to contract by 15 per cent this year the demand for mobile systems and phones is expected to remain weak at least well into next year. ®

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