NEW YORK -(Dow Jones)- Swedish telecommunications group Telefon AB L.M. Ericsson Wednesday said another 10,000 jobs will be eliminated in the continuing restructuring of its troubled Infocom division, which makes equipment for traditional telephone networks.
In the past two years, more than 10,000 jobs have already been shed at Infocom. Ericsson has accelerated the overhaul of the unit as profits have been squeezed by deregulation of European telecommunications markets and increasing competition.
Ericsson in October said it was halfway through a restructuring at the unit. "At that stage about 10,000 people had either moved within Ericsson, been outsourced or made redundant," Ericsson said. The rest of the effort will affect a similar number of people and will be detailed "in the near future and contain a mix of measures," Ericsson said Wednesday.
Most of the job cuts will be made in 1998 but overall, Ericsson is expected to boost its work force because the other units are growing rapidly.
The restructuring at Infocom concerns mainly the production, administration and marketing units. Ericsson, based in Stockholm, has a total of 110,000 employees in more than 130 countries. Ericsson said the Infocom revamp will generate annual cost savings of more than 2 billion kronor ($257 million).
Unlike Ericsson's booming businesses that supply equipment and phones for mobile-telephone systems, Infocom supplies gear for the traditional fixed phone systems. Wireless-network gear accounts for the bulk of Ericsson's group profits.
Demand is shriveling for fixed-network gear because Deutsche Telekom AG, France Telecom SA and other European carriers have been partly privatized and are scaling back spending on fixed gear. In addition, many telecom companies see wireless systems as a cheaper way to establish telecom networks in many developing countries.
To adapt to the new environment, Ericsson said Infocom will be concentrated in a very small number of centers that will serve many countries and customers, rather than having complete industrial operations in many local regions. |
