Swedish telecoms giant Ericsson has reported a 92pc slump in net profits for the last three months of 2009 due to falling sales and the rising costs of a restructuring plan.
It also said it will cut a further 1,500 jobs, which will bring to 6,500 the number of jobs cut since the announcement of the company’s restructuring plan in January 2009. Ericsson employed around 83,000 staff at the end of 2009.
Ericsson said its net profit for the fourth quarter of 2009 was SEK 314 million (US$43.4 million), down from the SEK 3.9 billion reported in the same period in 2008.
Sales at the telecommunications equipment maker fell 13pc to SEK 58.3 billion (US$8.1 billion) during the fourth quarter, down from the SEK 67 billion sales figure reported a year earlier.
Costs of restructuring spiral
Ericsson also said that while it had originally estimated its restructuring plan would cost SEK 6-7 billion, it now expects it to end up costing SEK 13-14 billion.
It said it plans to have the restructuring programme completed by the second quarter 2010.
“During the second half of 2009, networks’ sales were impacted by reduced operator spending in a number of markets. Group sales for the full year were less affected and the operating margin increased slightly,” said Hans Vestberg, president and CEO of Ericsson.
However, Vestberg added that Ericsson had maintained market shares in all segments, and said that the company’s cash flow was good and its financial position strong.
“The services business performed well, and our joint ventures remain on track to return to profit,” he said.
Vestberg took over from Carl-Henric Svanberg at the start of January 2010 when Svanberg moved on to the position of chairman of oil company BP.
Photo: Hans Vestberg, president and CEO of Ericsson
Article courtesy of Businessandleadership.com
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