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Today Ericsson reported a 31 percent drop in its fourth-quarter profits to 3.9 billion kronor ($465 million), announced 5,000 job cuts and said its core telecommunication equipment business was still unaffected by financial turmoil. Ericsson saw a large loss in its handset unit, but demand from […]

ericsson_logoToday Ericsson reported a 31 percent drop in its fourth-quarter profits to 3.9 billion kronor ($465 million), announced 5,000 job cuts and said its core telecommunication equipment business was still unaffected by financial turmoil. Ericsson saw a large loss in its handset unit, but demand from telecommunication operators and a weakening currency meant strong equipment sales. According to the AP, Ericsson Chief Executive Carl-Henric Svanberg said:

“It remains, however, difficult to more precisely predict to what extent consumer telecom spending will be affected and how operators will act,” Svanberg added. “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 2009.”

That conservative thinking is why Ericsson is cutting its workforce, hoping to lower its burn rate through tumultuous times. I can’t fault this line of thinking, especially given the weakness of other players in the market such as Nortel, which filed for bankruptcy last week or Motorola, which has laid off thousands. However, it’s a vicious cycle, as the news of layoffs (and the layoffs themselves) cause folks to rethink their spending. I want to buy into the idea that we have nothing to fear but fear itself, but in times like these, that’s a hard sell.

  1. [...] Tracking Oklahoma and the Top US Layoff News Tracking the top layoffs news « Rumors: Tropicana layoffs may cut 117 dealers Ericsson eliminates 5000 jobs January 21, 2009 http://gigaom.com/2009/01/21/ericsson-cuts-5000-jobs-after-strong-quarter/ [...]

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  2. Along the lines of job cuts, I also see that Microsoft is talking about it.

    http://www.telecomengine.com/newsglobe/article.asp?HH_ID=AR_4741

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  3. How can a 31% drop in profits be anything close to “strong”? Granted you’re probably talking about their infrastructure sales but that apparently is dwarfed by cell phone sale (where I’m guessing their 31% drop in profits originates from).

    Also wouldn’t infrastructure be lagging behind cell phone sales? First the carriers release they aren’t getting new subs and then in 2 quarters they stop buying new equipment like before.

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  4. [...] Read more:  Ericsson Cuts 5000 bJobs/b After Strong Quarter [...]

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  5. [...] in the second half of 2008 and the velocity of cuts is going to increase in 2009. With Microsoft, Ericsson, Sprint, AMD, and Corning announcing tens-of-thousands of jobs in January 2009, we would have to [...]

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