Ericsson, the world's leading supplier of mobile phone network equipment, presented a strong balance sheet for the fourth quarter on Jan. 21 but said it will cut 5,000 jobs to counter the effects of global economic crisis.
Ericsson plans to continue a cost-savings program launched a year ago, cutting an additional 5,000 jobs worldwide including 1,000 in Sweden, mainly in Stockholm, the company said. A spokeswoman said the group had already 4,000 jobs worldwide last year, but would not specify which divisions to be affected by the latest round of cuts.
At the end of 2008, the group had 78,750 employees, including 20,150 in Sweden, compared to 74,000 a year earlier. In other words, the overall number of employees has increased as Ericsson continues to hire in strategic divisions such as research and development to ensure its future growth.
The new restructuring plan, which targets annual savings of 10 billion kronor (US$1.2 billion) as of the second half of 2010, will entail costs of six to seven billion kronor in 2009, Ericsson said.
In the fourth quarter of 2008, Ericsson's net profit fell by 30% to 4.06 billion kronor, while sales rose by 23% to 67.02 billion. For the full-year, the net profit plunged by 47% to 11.66 billion kronor while sales rose by 11% to 208.9 billion.
"We have had a solid performance in 2008," chief executive Carl-Henric Svanberg said.
He said Ericsson had registered "higher business activity", as "basically every market unit around the world had higher-than-expected activity in the fourth quarter."
Svanberg said Ericsson had experienced little of the global economic crisis so far. "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," he said.
Svanberg also defended himself against charges that Ericsson was using the crisis as a pretext to cut jobs, citing intense competition in the sector. "Nothing comes easy in this industry. We have to fight every day for our efficiency, to make sure we stay in a leading position," he said. He noted that after the previous crisis in the telecoms sector, "we were 12 vendors that were basically able to roll out technology. Today there are three or four left."
Copyright Agence France-Presse, 2009