Ericsson targets 10,000 redundancies worldwide

Telecoms giant blames global financial crisis for poor sales performance and impending job losses.

The new year starts for Ericsson with a rash of redundancies and falling profits following poor demand for public networks and mobile phones.

Ericsson's chief executive, Sven-Christer Nilsson, has announced that both profit and sales for 1998 will be below market expectations and substantial job losses will occur as a result.

Nilsson blamed the anticipated shortfall on the continuing global financial crisis.

"The financial crisis in certain markets and the related general economic uncertainty is affecting us and emphasises the need for a strengthening of the ongoing rationalisation programmes," he said.

An estimated 10,000 jobs will be lost throughout the organisation, although restructuring is unlikely to have any major effect on its UK operation and its 3,500 UK employees. Ericsson employs over 100,000 people worldwide.

"I'm not expecting any major effects in the UK," said Lars Stilberg, senior vice-president of communication at Ericsson. "The company in the UK has already undertaken a lot of measures in order to streamline operations."

In the UK, Ericsson has had a good year and is still recruiting, so no business closures or job losses are planned at this stage, a company spokeswoman said. The UK is Ericsson's number three market after China and the US.

But whether Ericsson will actually close plants or simply sell them off remains unclear, according to Neil Barton, a financial analyst at Merrill Lynch. "I'm sceptical as to how many staff will be affected - we're not necessarily talking about layoffs," he said.

The situation is not expected to improve in the short term. Nilsson has said that Ericsson doesn't expect to reach its goal of 20 per cent growth originally estimated for this year.