Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (4670)	4/20/2001 3:52:42 PM
From: Jim Oravetz	Respond to of 5390

Ericsson to axe 10 000 worldwide By Paul Dempsey, Electronics Times Apr 20, 2001 (3:07 AM) URL: electronicstimes.com Comms giant Ericsson has unveiled plans to cut 10 000 posts from across its operations, as the wireless market downturn continues to bite. The move puts its UK operations back in the firing line, only two months after 1200 staff were made redundant at two handset factories because of an outsourcing agreement. Ericsson, like Nortel Networks, is announcing more cuts in addition to sizeable redundancies unveiled earlier this year. Ericsson has set out the cost savings it intends to achieve with its latest 'efficiency programme', but has yet to say how many staff will go at individual sites. The company does not expect to lose any full-time R&D engineers. Some R&D centres are likely to be merged, however, and the company says it will also be cutting down on its use of freelance consultants by as much as 50%. Another question mark hangs over the R&D operations because of Ericsson's confirmation that it is in talks with Sony over co-operation on mobile comms technology, particularly handsets. Observers believe this could lead to a slimming down of R&D further down the line, if the two companies pool resources and rationalise their work. Ericsson has 13 UK sites, including an R&D operation in Basingstoke. Kurt Hellström, president and CEO, said: "With no signs of a short-term turnaround, we are adjusting to these challenging circumstances by reducing our cost base by more than SKr20bn (£1.37bn)." The cuts targets include SKr5bn from concentrating R&D work and cutting consultants, SKr8bn from reduced selling and administrative activities, SKr5bn following a retreat from "selected markets", and SKr2bn from reduced IT spending. "In the light of the current market situation, we are further streamlining our phone operations, bringing the number of employees to less than 5000 by the end of this year," said Hellström. "Product design, R&D, marketing and sales of strategic products will be the main focus, with the rest of the operations - supply, production and distribution - effectively outsourced." Ericsson unveiled the cuts alongside its first quarter 2001 results. These showed pre-tax profit down 90% at SKr60m from SKr540m a year ago. Sales fell only 5% overall to SKr55.9bn, but a 13% gain in Ericsson's main Systems division, supplying communications infrastructure kit, was countered by a 52% slump in handset sales to SKr7.2bn. Handset orders fell by 51% also to SKr7.2bn. Mobile phones made an operating loss of SKr5.7bn. Ericsson has revised down its forecast for the total handset market to 430-480 million units, including 20-25 million GPRS phones. "The market for 3G is just starting," Hellström added, "and we expect operating spending on 3G systems, phones and applications to exceed $50bn annually from 2003."