Ericsson says that it is to cut up to 13,000 jobs, in a move that will bring its staff numbers crashing down to a level not seen since 1968. The company will fall to around 47,000 by the end of next year said the new President and CEO, Carl-Henric Svanberg. His predecessor, Kurt Hellstroem, had already cut over 40,000 jobs. The move follows the company's tenth quarterly loss of $421 million.
The company's shares surged by almost 30% on the news of the job cuts. They have fallen by 96% since their March 2000 peak, wiping out US$280 billion in stock market value.
"We remain determined to return to profit during 2003 excluding additional charges for the further restructuring announced today. Although first quarter sales are likely to be the low point this year, I want us to be able to generate profit even if sales remain at current levels. We are therefore implementing further operating expense reductions of US$600 million and additional cost of sales reductions of US$960 million The additional US$1.3 billion restructuring charges have a relatively quick pay back and we have sufficient liquidity to carry us through." said Carl-Henric Svanberg.
Orders booked were US$3.25 billion after deduction of cancellations of US$8 million This is a 35% decline year-over-year, of which ten percentage points are due to negative currency exchange rate effects. Compared to the fourth quarter, orders booked declined 12%. Sales were US$3.1 billion, representing a decline of 30% on a sequential basis, in line with normal seasonality. The year-over-year decline was also 30%, of which seven percentage points are attributable to negative currency exchange rate effects. Adjusted for such currency effects, North America was up slightly while several other large markets were weak, including China, Japan, UK and Italy.
The gross margin adjusted for restructuring improved year-over-year from 31.7% to 34.1%. Gross margin improved, despite falling volumes, as a result of lower component prices, better capacity utilization and other cost reductions.
Orders in Western Europe and Brazil were flat year-over-year while orders were down in all other regions. Orders for GSM/WCDMA were down 10% sequentially while other mobile equipment, including CDMA, were down even more. Orders for Professional Services were down 3% sequentially, mainly due to seasonal effects.
Orders in Latin America improved sequentially, mainly due to orders for GSM and EDGE equipment in Brazil. Demand in the US and China was weak with most other areas of Asia holding up relatively well. The Europe, Middle East and Africa (EMEA) region was generally weak with the exception of the UK and Spain.
During the quarter, Sony Ericsson Mobile Communications (SEMC) shipped 5.4 million units, which is a 7% decline compared with the first quarter 2002. Sales declined 35% sequentially and 28% year-over-year due to lower volumes and price pressure. However, with the planned phase out of TDMA products, shipments of TDMA dropped more than 90% compared to the first quarter last year. At the same time, GSM unit shipments increased 30% with the introduction of new models. The planned product mix shift along with increased price pressure has led to a lower average selling price.
Although SEMC reported a loss for the quarter, volumes and sales are expected to increase during the second quarter with the introduction of new models in the Japanese and GSM/GPRS markets. SEMC's ambition is to be profitable for the full year."
Posted to the site on 30th April 2003
Posted to: www.cellular-news.com/story/8775.php