Swedish telecoms giant Ericsson announced today that it was in the process of implementing a cost-cutting 'efficiency program' that could affect as many as 10,000 employees and would result in a 'substantial reduction' of its 15,000 non-staff consultants.
The company currently has 100,000 employees in 140 countries, including 2,500 employees in Dublin, Athlone and Cork. Their Irish operations include Research and Development, Consultancy and Training.
Mads Madsen, Ericsson's Director of Media Relations, confirmed to OnBusiness that it would be some time before the company announced the breakdown of the cost-cutting programme. He said about half of the job cuts would be made outside Sweden, but refused to be drawn on how many Irish jobs would go.
Mr Madsen said the process of working through the organisation on a global scale was being undertaken as rapidly as possible.
Ericsson also reported a pretax profit of 600 million kronor ($60 million dollars) for the first three months of the year, in line with its revised first-quarter forecast last month and with analysts' expectations. The profit includes a one-time capital gain of 5.5 billion kronor ($605 million dollars) from the sale of the company's stake in US internet access provider Jupiter Networks during the quarter.
'A general economic downturn and an abruptly slower telecom sector are affecting our customers as well as us. Many operators are postponing their investments, which has resulted in an overall reduction of sales,' Ericsson chief executive officer Kurt Hellstroem said in a statement.
Ericsson's sales slipped by 5% to 55.9 billion kronor during the period. The company acknowledged continuing problems in its handset division, saying a variety of market factors had resulted in 'higher losses in our mobile phones business than we anticipated.'
That division reported an operating loss of 5.7 billion kronor and sales for the quarter slumped 52%, Ericsson said. As a result, the company said they were further streamlining their phone operations including cutting numbers of staff employed in that sector. 'This will give us a smaller, more manageable mobile phone business with lower risk', they added.
Ericsson confirmed yesterday that it was in negotiations with Japanese consumer electronics giant Sony about collaboration in their respective handset divisions. Industry experts have stressed since last year Ericsson's need to find a capable collaborator to rescue its handset division and analysts described Sony as a 'dream partner' for the Swedish company.
