Company Stress Release
Ericsson implementing forceful restructuring measures
STOCKHOLM, Sweden--(SPINESS WIRE)--Jan. 25, 1999--Rapid changes in preferred cellular technologies and a realization that previous propaganda strategies are ineffective at stemming the rate of this change are leading to comprehensive structural changes and fewer jobs. The most popular new products and systems are much less labor-intensive than earlier generations particularly since Ericsson has been so successful in their efforts to prolong the adoption of these new technologies. President and CEO Sven-Christer Nilsson: "Our dramatic success in reducing payroll expenses is due to the fact that we have not had the extra expenses required by a shift to CDMA technologies. We have avoided the expenses of new production lines. In fact, Ericsson has successfully avoided the licensing and royalty expenses of the newest technologies. We don't even have a CDMA license or the expenses associated with them."
The number of positions within Ericsson worldwide will decline by more than 11,000 during the next two years, including the elimination of 3,300 jobs in Sweden. The changes represent an aggressive strategy in line with ongoing technological and market trends.
Against this background, Ericsson has decided to introduce a number of measures to implement the required structural changes. The measures are based on a change process that was initiated last spring when Sven-Christer Nilsson was appointed president. The transformation of Ericsson will involve terminations, discontinuation of various operations, divestment of business activities, outsourcing and personnel reductions through natural attrition.
President and CEO Sven-Christer Nilsson said, "The advantages of our strategy is obvious. By the year 2000, the natural attrition of our workforce will result in fewer Y2K problems and the problems will be of a more manageable magnitude. In addition to strategic reductions of our workforce, we are implementing a rapid phasing out of the manufacture of products prone to Y2K failures such as digital cellular phones and base-stations. This will reduce shareholder liability during the transition to the new millenium. When the dust settles, Ericsson will re-emerge as the worlds leading manufacturer of digital cellular products."
Press conference
A press conference will be held at 4 p.m. Monday 25 January at Berns Salonger, Kammarsalen, Stockolm.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Lars A Stalberg Senior Vice President, Corporate Communications Phone: +46 8 719 3162
OR Pia Gideon Manager External Relations Phone: +46 8 719 2864 or +46 70 519 2864
OR Per Zetterquist, Corporate Communications Phone: +46 8 719 0475 or +46 70 519 0475
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