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November 07, 2012

Swedish Telecom Equipment Supplier Ericsson to Cut Jobs

By Ashok Bindra, TMCnet Contributor

With the telecom industry facing a global slowdown, one of Sweden’s global telecom equipment suppliers, Ericsson (News - Alert), is planning to cut more than 1,500 jobs in its home country. Reuters reports that the world's biggest mobile phone networks builder is taking the step to drive down costs amid downturn.

The report indicates that the Swedish company has been forced to cut staff because competition has driven telecom gear prices down, while operators are spending less due to weaker global economy.

Ericsson's core profit fell 42 percent in the third quarter due to slower orders and a shift in business mix, which resulted in less profitable contracts, therefore forcing the Swedish telecom giant to cut costs.

The report shows that Ericsson announced a layoff of 1,550 employees in Sweden out of a total workforce of 17,768. The company said the job cuts eliminated redundancies in the company.

“We must ensure that we can continue to execute on our strategy to maintain our market leadership, invest in R&D and meet our customers' needs," said Tomas Qvist, head of human resources at Ericsson, in a statement. "To secure this we need to focus on reducing cost, driving commercial excellence and operational effectiveness."

A company spokeswoman said Ericsson’s total restructuring costs this year will be 4 billion crowns, or about $597 million.

Others hit by telecom downturn include Alcatel-Lucent, Nokia (News - Alert) Siemens and China’s ZTE Corp. and Huawei Technologies. While Alcatel-Lucent is planning to sell assets to strengthen its balance sheet after posting a second straight quarterly loss, Nokia Siemens (News - Alert) is slashing a quarter of its workforce to save one billion euros in cost by the end of 2013. Likewise, ZTE and Huawei are also struggling with weaker sales.

Edited by Rachel Ramsey
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