Ericsson to cut 20,000 jobs

Ericsson is shedding 20,000 jobs after announcing worse than expected first-quarter losses.

Some 10,000 jobs will go this year - 2,000 staff have already lost their posts - with a further 10,000 being cut in 2003.

Ericsson made a first quarter pre-tax loss of 5.4 billion Swedish kronor (€590m) and says it doesn't expect to return to profit until next year.

It now expects the mobile phone systems market to fall by more than 10% this year, below a previous forecast of flat to down 10%.

The company has also announced a 30 billion skr rights issue, to be carried out before the end of the third quarter.

President Kurt Hellstroem says: "As expected, this past quarter was very challenging. Many operators have recently lowered investment plans further. As sales will be lower than anticipated, with ongoing aggressive costcutting, we plan to return to profit at some point in 2003."

Ericsson plans to make 10 billion skr in cost cuts in 2002 and a further 10 billion in 2003. It expects 8.5 billion skr in restructuring costs in 2002 and 2 billion in 2003.

Coupled with previously-announced restructuring programmes, Ericsson expects savings of 28 billion skr this year, 38 billion next year and 40 billion from 2004.

First quarter sales fell by 25% to 37 billion skr from 49.8 billion skr, with new orders down to 41.9 billion skr from 69.3 billion skr - a fall of 39.5%.

Ericsson says the Sony Ericsson handset business reached break-even. It expects global handset sales to be between 400 and 420 million units this year, the same as the level estimated by Nokia last week.