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Ericsson ups jobs cull to 6,500

Profits plunge, competition rises

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Ericsson will be laying off another 1500 people following a quarter that saw net income down to less than a fifth of last year's.

In the last three months of 2009 Ericsson's net income was 725m Swedish kronor (£62.5m), on sales of 58bn kroner, compared to the 4bn kroner the company brought in during the same period of 2008, on sales of 67bn kroner.

The figures prompted the company to announce it will be laying off a total of 6,500 people as part of its program of cost-saving - up from the 5,000 announced in January last year.

The drop in revenue can, in part, be attributed to network operators holding back on investments during the financial squeeze. But competition from Huawei is also significant - Huawei has been winning a lot of infrastructure deployments around Europe and the world, putting pressure on the small club of existing suppliers.

On Friday the company's joint venture with Sony announced things were equally bleak in the handset world, where sales for the tail of 2009 were more than 40 per cent down on 2009, with the average price per handset falling by a Euro to €120.

Ericsson has spent the last 12 months cutting costs, and the company reckons it's on track to achieve around 15bn kroner in annual savings, though it's going to have to spend another 14bn kroner to get there.

Pressure from America, in the form of Apple and Google, is eating away at the more profitable end of the handset market; while pressure from China, in the form of Huawei, is snatching infrastructure deployments that should be funding the company's recovery. None of this is good news while the still-unstable economy makes every penny harder to pick up. ®

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