Global technology giants Intel and Ericsson overnight said they would lay off thousands of staff.
In a statement, Intel said it was restructuring to adjust to weak demand, with 5,000 to 6,000 employees potentially to go. The chip giant quickly added that the capacity cuts wouldn't affect its plans to deploy 45-nanometer and 32-nanometer manufacturing processes.
Ericsson's results, which came out overnight, showed profits in the fourth
quarter of 2008 down from the corresponding quarter of 2007. Ericsson blamed the
drop on restructuring charges and a "dramatic drop in the
contribution" from Sony Ericsson, which is Ericsson's
handset-manufacturing joint venture with Sony.
According to Ericsson's statement, the 5,000 laid-off
workers will include around 1,000 in Sweden, primarily in
Stockholm. Many of those made redundant will be consultants and
other temporary staff, although Ericsson has also said it will
consolidate its research and development sites.
In the statement, Ericsson president and chief executive
Carl-Henric Svanberg claimed his company had demonstrated "solid
performance" in 2008.
"Sales grew by 11 per cent with good demand for our entire
portfolio and across the world," Svanberg said. "Changes in
currency rates had a very small effect on full-year growth."
"Professional services have continued to show strong growth.
Operating margins, excluding Sony Ericsson, have steadily improved,
and our financial position is strong ... Sony Ericsson is affected by the economic downturn and the
declining demand in the consumer market and has taken necessary
Svanberg said the recession's effects on the global
mobile-network operator market — Ericsson's primary customer base
— "should not be that significant" as operators are still doing
well and traffic continues to grow.
"It remains, however, difficult to more precisely predict to
what extent consumer telecom spending will be affected and how
operators will act," Svanberg warned. "To date, our
infrastructure business is hardly impacted at all, but it would be
unreasonable to think that this would be the case also throughout
Ericsson also said it would reduce its number of software
platforms and "increase the re-use of hardware", and would also
move some of its operations to "low-cost" countries.