Ericsson to cut 1,500 more jobs as profits plunge

Click to follow
The Independent Online

Mobile phone equipment group Ericsson reacted to a 82 per cent slump in profits in the last quarter of 2009 by announcing it was to axe a further 1,500 jobs.

The group reported that its net income had plummeted from Skr4bn in the fourth quarter of 2008 to Skr725m this year. This dragged its full year results down from Skr11.6bn to Skr4.1bn.

The group’s president and chief executive Hans Vestberg blamed the fall in sales on competition as well as mobile operators slashing investment in infrastructure. He added that the move to mobile broadband investment had not offset the decline in voice calls and the wider economic slump.

The problems besetting the industry pushed Ericsson to increase its cost cutting drive from Skr10bn to Skr16bn and it yesterday revealed it was to cut more staff. It had originally planned to reduce headcount by 5,000. That figure “has been exceeded and is estimated to reach approximately 6,500,” it said.

The group started its original plan to cut costs in January last year, with the restructuring charge estimated to reach as high as Skr7bn. Ericsson was ahead of plan by the summer and looked at targeting Skr6bn more by June. The restructuring charges are now estimated to be as high as Skr14bn.

Mobile voice and data traffic has continued to grow, and the company warned that it will “in the longer-term require operator investments in capacity and next generation internet protocol networks”. It said that while operators in China, India and the US were still investing, those in Central Europe, the Middle East and Africa have become more cautious.