Ericsson to cut 5,000 jobs

Telecommunications firm Ericsson AB will slash about 5,000 jobs as part of its cost cutting initiatives even as it reported a substantial fall in net income for the fourth quarter ended December 31, 2008.

The Swedish company's net income declined 31 per cent to 3.89 billion kronor for the fourth quarter. It had a net income of 5.6 billion kronor in the same period a year ago.

"Cost reductions will be achieved through reduction of the number of consultants and other temporary staff, consolidation of R&D sites and layoffs. These activities will result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden, primarily in Stockholm," Ericsson said in a statement today.

Meanwhile, the firm has posted a 23 per cent growth in net sales to 67 billion kronor in the quarter under review. It had reported net sales worth 54.5 billion kronor in the year-ago period.

"We have had a solid performance in 2008... In the present environment, we will continue to reduce costs, across all parts of the company at the same pace as in 2008 with restructuring charges of six to seven billion kronor, targeting annual savings of 10 billion kronor from the second half of 2010," Ericsson President and Chief Executive Officer Carl-Henric Svanberg said.

For the full year ended December 2008, Ericsson's net income declined by 48 per cent to 11.3 billion kronor.