Ericsson Announces Job Cuts

January 21st, 2009 at 12:00 am


The recession is spreading and more and more big names are being affected.  Yesterday we reported that Microsoft sold its stake in Comcast and was tightening its belt.  Across the pond in  Sweden, one of the biggest telecommunications equipment makers in the world announced a drop in their revenues and profits and consequently will be laying off a couple of employees.

Again it’s another case of restructuring and job cuts to save some money and keep the business going.  In Ericsson’s case, the move will affect about 5000 jobs.  This is all despite Ericsson admitting that its core infrastructure business was not yet feeling the effects of the global economic downturn, and its better-than-expected report sent shares up more than 10 percent to 62 kronor in Stockholm.

However, their net profits from last year’s fourth quarter were down by $465 million, about 3.9% compared to Q4 2007.  They’re saying that most of the loss resulted from the weaker sales of their mobile handsets (SOny Ericsson).  The joint venture with Japan’s Sony last week said it had swung to a fourth-quarter loss of $243 million.

Still, Ericsson CEO Carl-Henric Svanberg says that the recession hasn’t hit hard on the network and telecom industry yet.  "It remains, however, difficult to more precisely predict to what extent consumer telecom spending will be affected and how operators will act," Svanberg added. "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."

All in all the restructuring, effects of the downturn or not, is a preemptive move by Ericsson to dampen the blow of the economic crisis when it hits them the hardest.