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Ericsson profits slump following redundancy costs

Alex Scroxton

Quarterly profit at Ericsson has slumped by 35% year-on-year as the vendor felt the impact of costs associated with 5,000 job cuts across the business.

All told, the Swedish communications giant made net profit of SEK540m (£45.2m), although sales were up 12% on this time last year, hitting SEK49.6bn.

In spite of a torrid fiscal Q1, Ericsson put on a happy face today, as president and CEO Carl-Henric Svanberg said that the firm was still growing ahead of the market.

"Sales of network infrastructure are stable and the demand for professional services is growing. The effects of the recession on the global mobile network are so far limited," he said.

"We have seen [some] operators postpone investments. Some are also more cautious with longer-term investment in fixed networks. Most, however, have healthy financial positions, there is strong traffic growth and the networks are fairly loaded," he continued.

Meanwhile, Ericsson's previously announced cost-cutting activities are continuing, according to Svanberg, who is targeting annual savings of SEK 10bn from the second half of 2010.

The company's joint ventures, Sony Ericsson and ST-Ericsson, which are both suffering from a dramatic decline in consumer demand for mobile handsets, are bearing the brunt of this restructuring activity.

This story originally appeared on Microscope.


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