Ericsson to reduce workforce as demand for telecoms equipment slides
Core profits fell by 42 percent during the third quarter of 2012 as increased competition and reduced spending from network operators due to the global economic slowdown harmed Ericsson’s business.
The company currently employs 17,768 people in Sweden and said the redundancies were inevitable as part of a £374 million restructuring programme.
Ericsson job losses in Sweden
Ericsson sold its stake in the Sony Ericsson joint venture last year as it looked to focus its attention on its network equipment business, and it remains confident that restructuring and improved efficiency would allow it to remain competitive.
“We believe that the fundamentals for longer-term positive development for the industry remain solid. There are now one billion smartphones in the world and the number is expected to reach three billion in 2017,” said Hans Vestberg, president and CEO of Ericsson. “The introduction of new devices and applications put higher consumer demands on network performance and quality. This drives demand for our technology, software and services capabilities.”
“However, at the same time, we see a continued macroeconomic slow down and political unrest in parts of the world, which has led to more cautious operator spending in some parts of the world,” he added. “Our profitability is not satisfactory. Operating expenses for comparable units have declined -7 percent year-on-year and we also see steady improvements in execution of projects.”
“These improvements are encouraging, but not enough and we will continue to pro-actively identify and execute additional efficiency gains and cost reductions,” Vestberg concluded.
Ericsson’s reputation suffered a blow last month when O2 promised to stop using the Ericsson central user database that was blamed for major service outages in the UK during October and July.
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