Ericsson to lay off 5,000 worldwide

Ericsson is making another 5,000 staff redundant as part of a $1.2bn cost reduction programme, despite reporting better than expected fourth quarter results.

The Swedish firm said sales had risen 23% and earnings per share were ahead of expectations.

However, the firm said a further 5,000 jobs would be going across the group worldwide, with about 1,000 going in Stockholm. The move extends a cost-cutting programme started last year – Ericsson cut 4,000 jobs – although the company has been shedding staff for years.

Once Ericsson lost its number two position in the mobile phone market behind Nokia some years ago, thousands of jobs were shed across both its mobile phone manufacturing business and its network equipment operations.

“We have had a solid performance in 2008,” said Carl-Henric Svanberg, Ericsson’s chief executive. “Professional services have continued to show strong growth. Operating margins, excluding Sony Ericsson, have steadily improved, and our financial position is strong with net cash of SKr35bn,” he said.

But Svanberg said the situation was expected to deteriorate in 2009 as the global recession took hold.

The company will now axe consultants and other temporary staff, consolidate R&D sites and make other layoffs.

via Computer Weekly, news report from AFP follows:

STOCKHOLM (AFP) — Ericsson, the world’s leading supplier of mobile phone network equipment, on Wednesday reported a 30-percent fall in fourth-quarter profit and said it would carry on with plans to cut 5,000 jobs.

The group, already in the midst of restructuring, said it would also continue to implement a cost-cutting drive that will see the loss of 5,000 posts, including 1,000 in Sweden.

Ericsson employed 78,750 people at the end of 2008 compared with 74,000 a year earlier.

The planned measures are designed to save the group 10 billion kronor from the second quarter of 2010.

Ericsson chief executive Carl-Henric Svanberg defended plans to eliminate jobs.

“Nothing comes easy in this industry. We have to fight every every day for our efficiency to make sure we are staying in a leading position,” he told a press conference.

He cited the situation of other industry participants, notably Nortel, Motorola and Siemens, that he said are currently struggling with the worldwide economic downturn.

“We are the ones that have managed to stay on a lead. I think we have a huge responsibility to take every measure to defend our position and make sure Ericsson stays a grand company.”

The company said its fourth-quarter net earnings came to 4.064 billion kronor (374.6 million euros, 485 million dollars), down 30 percent from the same quarter of 2007.

Sales rose 23 percent to 67.025 billion kronor.

For the full year 2008 net earnings at Ericsson fell 47 percent to 11.667 billion kronor from sales that gained 11 percent over 2007 to 208.93 billion kronor.

Ericsson shares shot up more than 10 percent at the opening of trade in Stockholm on a market that was 0.30 percent weaker.

“The economic recession is spreading across the world,” Svanberg said in a statement.

But he added that “the effects on the global mobile network market should not be that significant as most operators have healthy financial positions, there is a strong traffic growth and the networks are fairly loaded.”

“To date, our infrastructure business is hardly impacted at all, but it would be unreasonable to think that this would be the case also throughout 2009.”

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