Ericsson says to cut 1,500 more jobs, profit plunges
Swedish telecom giant Ericsson announced on Monday it would cut an additional 1,500 jobs under a restructuring plan that contributed to a 92 per cent fall in net profit in the fourth quarter.business Updated: Jan 25, 2010 14:01 IST
Swedish telecom giant Ericsson announced on Monday it would cut an additional 1,500 jobs under a restructuring plan that contributed to a 92 per cent fall in net profit in the fourth quarter.
Ericsson reported a net profit of 314 million kronors (30.7 million euro, 43.4 million dollars) between October and December compared to 3.89 billion kronors ins the same period in 2008, the company said in a statement.
The profit margin was much lower than expected as analysts polled by Dow Jones Newswires had forecast a net profit of 3.23 billion kronors.
Restructuring costs reached 4.3 billion kronors in the fourth quarter, compared to 2.3 billion kronors in the same period in 2008, and for the full year the charges totalled 11.3 billion kronors, the company said.
"When the initial (restructuring) programme was announced in January 2009, it was anticipated that the actions would result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden, Ericsson said.
"The 5,000 has been exceeded and is estimated to reach approximately 6,500," the company said in the statement.
Sales fell by 13 percent to 58.3 billion kronors in the fourth quarter in the wake of the global economic crisis and growing competition from telecom equipment industry with the rise of China's Huawei.
"During the second half of 2009, Networks' sales were impacted by reduced operator spending in a number of markets," chief executive Hans Vestberg said in a statement.