Ericsson to lay off 5,000 despite posting profit

sms1Despite the fact that it posted a surprisingly strong profit in the fourth quarter of 2008, Sweden’s telecom company Ericsson announced it was planning to terminate 5,000 jobs, 1,000 of which will be in Sweden. The rest of the 4,000 layoffs will affect Ericsson’s other business sites around the world.

The telecoms giant made a net profit of 3.9 billion kronor (USD 462 million) in the fourth quarter of 2008. This is a 30 percent decrease over the same period in 2007, suggesting the firm is taking a hit during the global economic slump; although not as badly as its competitors. Ericsson has nonetheless decided to axe 5,000 of its staff in an effort to maintain profitability, says The Local newspaper.

Of the 1,000 jobs to be terminated in Sweden, nearly all of them will affect the Stockholm area. Ericsson CEO Carl-Henric Svanberg admits that his firm had an impressively strong 2008, but warned that it was “unreasonable” to expect the company’s infrastructure would remain unaffected throughout 2009.

It’s this logic that urged Ericsson to carry out its programme of cost reductions that include a number of redundancies. Consultants and temporary staff will be the first to lose their jobs, and research and development crews will probably be merged and trimmed.

“Nothing comes easy in this industry. We have to fight every day for our efficiency to make sure we are staying in a leading position,” Svanberg said in defence of the layoffs.

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