Ericsson cuts 1,500 more staff as income dives

Michael Carroll
26 Jan 2010

Ericsson will offer more combined services in 2010 and cut another 1,500 jobs in a bid to shake off the effects of a tough 2009.

Net income plummeted 65% year-on-year to 4.1 billion kronor ($569 million) in 2009, as carriers hit hard by global recession slashed their investment in network infrastructure.

Revenues for the year fell 1% to 206.5 billion kronor.

Hans Vestberg, Ericsson’s newly appointed president and CEO, says the market will remain tough in 2010, but that the firm would look to stay competitive by offering more packages that combine the firm’s infrastructure, customer management and multimedia services.

“I want to see more combination in our products and services,” Vestberg told journalists at the firm’s results press conference yesterday.

He believes there is “big value” in combining products, noting that customers in developed markets are already looking beyond infrastructure alone as the means of growing their businesses.

Vestberg said Ericsson retained its position as the world’s biggest infrastructure vendor in 2009, with positive net cash of 36.1 billion kronor compared with 34.7 billion kronor at end-2008.

Cash will remain the firm’s focus in 2010, Vestberg said, meaning the firm will press on with a controversial cost-cutting program.

The vendor initially intended to cut 5,000 staff – including 1,000 in Sweden – but Vestberg said the target “has been exceeded [that] and is estimated to reach approximately 6,500.”

Much of the decline in infrastructure sales came during the second half, with three out of Ericsson’s five regions – western Europe, central and eastern Europe and Middle East & Africa, and Latin America - showing decreases.

Asia Pacific sales grew 4% year-on-year to 65.8 billion kronor, due to investment in TD-SCDMA equipment in China.

India will offer huge potential, Vestberg said. “There’s still a lot of coverage to be done…especially on 3G and mobile broadband,” he added.

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