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Ericsson sharpens axe - again

Another 5000 jobs go as mobile business flattens

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Cellular-infrastructure manufacturer Ericsson will lay off 5,000 in a bid to cut costs, ahead of the expected reduction in spending from telcos over the next few years.

Ericsson announced 4,000 layoffs at the tail end of last year, but said back in November that it expected sales to be flattish, and as the largest manufacturer of wireless networks the company expects to be hit hard by a slowdown in network expansion. The move will cost the company 7bn kronor (£600m), but should save more than SEK10bn, by the end of 2010.

During the last three months of 2008 net income fell by 31 per cent, to SEK3.89bn compared to the same period in 2007, despite sales up 23 per cent to SEK67bn. Losses by the mobile handset division - Sony Ericsson - combined with SEK2.3bn kronor spent on trimming jobs, combined to reduce earnings and prompted a proposed dividend of SEK1.85 kronor - 74 per cent of last year's divvy.

Sony Ericsson used to be a profit centre for the company, but last week reported losses of €187m for the last quarter of 2008, and stated that it was unlikely to make money in the first half of 2009.

It's not all bad news though - the collapse of Nortel Networks will mean less companies competing for contracts, depending of course on what becomes of Nortel. ®

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