Ericsson cuts more jobs as profits drop 92pc

Ericsson has announced 500 job cuts in the wake of a 92 percent year-on-year drop in quarterly profits.

On Monday, the telecommunications firm announced its financial results, which showed a drop in earnings per share from 1.21 Swedish kronor (10p) in the fourth quarter of 2008, to 0.1 kronor in the fourth quarter of 2009.

Ericsson blamed the drop on, among other factors, "the anticipated decline in GSM sales, accelerated by the current economic climate, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks".

Ericsson is one of the major suppliers of GSM equipment, which has seen a fall in demand as mobile operators ready themselves for the switch to new standards such as the long-term evolution (LTE) of 3G. Ericsson has supplied the equipment for one of the first such networks to go live, in Stockholm, but the technology is still in its early stages and many operators have not yet committed to using it.

At the start of 2009, Ericsson said it would be cutting 5,000 jobs. On Monday, the company said that target "has been exceeded and is estimated to reach approximately 6,500". A spokesman told ZDNet UK that the additional 1,500 losses included 1,000 redundancies within Sweden that were announced in December 2009.

In November, Ericsson axed 700 posts at its recently opened Ansty Park research and development facility in Coventry as part of its original reduction plan. Those cuts prompted the union Unite to ask business secretary Lord Mandelson to intervene in the site's closure.

Ericsson has not yet disclosed where in its global operations the newly announced 500 job losses will take place, the spokesman said, adding that the company operates in 175 countries.