Feeds

Ericsson to cut another 14,000 jobs

Oh dear

  • alert
  • submit to reddit

Internet Security Threat Report 2014


Swedish communications giant Ericsson revealed sweeping new job cuts on Tuesday after seeing its sales tumble 30 percent during the quarter.

The company said it cut 3,700 people during the past quarter and that it would now accelerate this restructuring program. Another 9,000 jobs are set to go by the end of this year, followed by the elimination of a further 5,000 positions by the end of 2003, bringing Ericsson's headcount to just 47,000, its lowest in more than a decade. The accelerated cost cutting plan will add SEK11 billion (EUR1.2 billion) to the company's restructuring charges.

The restructuring announcement was made as part of the company's first quarter results: its net loss totalled SEK4.3 billion (EUR470 million) and net sales during the period fell 30 percent to SEK25.9 billion. These figures were slightly better than analysts had expected, but the sweeping cost cuts took the market by surprise: although further reductions had been expected, analysts believed these might have been delayed for some weeks, as Ericsson's new CEO Carl-Henric Svanberg has been in the job for less than a month.

Svanberg said in a statement that he was determined to bring the company to profitability this year, excluding the extra restructuring charges for the cuts announced on Tuesday. He said the new cuts were unavoidable given the weaker than expected short term demand. "We are heading in the right direction, but a lot more can be done to simplify our way of working and further reduce costs," he said. "... I want us to be able to generate profit even if sales remain at current levels."

During the first quarter, orders were also down, falling 35 percent over the year-earlier period to SEK27.1 billion. The company also took a hit during the quarter after it lost a patent infringement suit with InterDigital Communications Corporation. Ericsson and its mobile phone joint venture Sony Ericsson will now pay USD34 million to InterDigital as part of the settlement, followed by annual payments of USD6 million until 2006.

Sony Ericsson Mobile Communications, which shipped 5.4 million units during the quarter, saw sales plummet 35 percent over the previous quarter to EUR805 million, due to weaker volumes and price pressure. Looking at the industry as a whole, Ericsson said it believes that 430 million mobile phones will be shipped this year, but as mobile operators are more cautious than ever about investing, Ericsson said it believes the mobile systems market could fall by more than 10 percent this year.

Despite the grim outlook from Ericsson, investors approved of the bold cost cutting actions at the company, and its shares were up more than 10 percent to SEK8.8 in Stockholm in early trading.

© ENN

Providing a secure and efficient Helpdesk

More from The Register

next story
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.