200 workers face job cuts at Ericsson
By Jennifer Davies and Mike Freeman
STAFF WRITERS
September 26, 2002
Ericsson is cutting 20 percent of its San Diego work force, citing the declining wireless market and slower-than-expected growth.
In a memo to employees, Ake Persson, head of Ericsson's San Diego operations, said the company will trim some 200 workers by mid-October as part of a cost-cutting plan. The company has about 1,000 workers employed in its San Diego wireless infrastructure operation.
Earlier this year, the troubled Swedish telecommunications company said it would slash jobs throughout the company because of declining revenue. Ericsson had more than 100,000 employees globally last year but expects to have less than 60,000 by the end of 2003.
In addition to the staff cuts, Ericsson is consolidating its San Diego operations into one facility on Lusk Boulevard and has put its leased 177,500-square-foot office building in Sorrento Mesa on the market.
The company plans to ship some jobs to Montreal, where it has a research and development facility, and to China, an increasingly important market for the company.
Ericsson set up shop in San Diego in 1999 when it took over the CDMA infrastructure division from Qualcomm as part of a settlement of a long-standing patent dispute over the wireless technology called code division multiple access, or CDMA.
Ericsson's San Diego operations make CDMA base stations, essentially closet-sized equipment that keeps mobile phones connected to conventional phone networks.
When Ericsson took over the division, it planned to become one of the top three CDMA equipment manufacturers, but it has faced fierce competition from industry leaders, such as Lucent Technologies and Motorola, as well as Samsung, which recently got into the business.
Michael King, an analyst for Gartner Group, said the layoffs are a result of problems in the larger wireless market and Ericsson's inability to compete with Asian manufacturers.
"They have been getting their heads handed to them," King said.
Also, after years of wireless phone companies investing billions of dollars in their networks, those networks now work well enough that there is no reason to add further equipment.
"You could almost say the wireless industry has done their job too well," King said.
All these factors have led to a highly competitive wireless equipment market, which is destined to see several companies either get gobbled up or go out of business, King said.
Wendy Faulk MacMurray, vice president of marketing and communications for Ericsson's CDMA Systems, said the cuts will help the company survive the current turmoil.
"We are doing everything we can to remain competitive," she said. "We are committed to CDMA. We remain committed to San Diego and believe we will be able to continue forward."
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