Feeds

Ericsson to cut another 14,000 jobs

Oh dear

  • alert
  • submit to reddit

Gartner critical capabilities for enterprise endpoint backup


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

The essential guide to IT transformation

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.