The economy may be showing signs of recovery but the telecom sector is far from being out of the woods, as demonstrated by Ericsson’s announcement today that it will slash 950 jobs in a move that isn’t part of the company’s $1.4 billion restructuring effort.
Like its competitors in the mobile infrastructure space, Ericsson has seen its revenue decrease as a result of mobile network operators cutting back on their investments in an effort to cope with economic woes of the past year. That fact is being exacerbated by what Om has called “telecom’s Titanic shift,” which has seen a transition away from entrenched players in the U.S. toward upstart equipment makers like Huawei and ZTE Corp. The Chinese vendors are ramping up in a big way, and have an added edge as 3G networks are being rolled out on their home turf. So it appears more turbulence is in store for the telecom gear vendors, even after struggling through a very difficult year.