Ericsson to slash jobs, AU job safety "unclear" - News - Business

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This story was printed from ZDNet Australia.
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Ericsson to slash jobs, AU job safety "unclear"

By Patrick Gray, 0
April 30, 2003
URL: http://www.zdnet.com.au/news/business/soa/Ericsson-to-slash-jobs-AU-job-safety-unclear-/0,139023166,120274095,00.htm

Ericsson is set to slash a further 7,000 jobs in a world-wide cost-cutting measure, bringing the total number of workers set to experience the axe to 14,000 over the next 20 months.

The move follows the release of the company's gloomy first quarter results. Net sales were down 30 percent from Q4 last year, and the company reported an adjusted pre-tax loss of 3.5 billion kronors (AUD$685 million).

Ericsson Australia's director of marketing and business development, Tony Malligeorgos, said the global cutback could be attributed to the downturn in the telecommunications sector over the last two years.

"It's been a decision by the management at a global level. They want to ensure the company is in a much better position," he told ZDNet Australia. "We now have a new CEO and a new corporate team and they've looked at the business... to be profitable this year that's going to need some more action on the costs".

As for job cuts in Australia, Malligeorgos says it's too early to know.

"The impact is unclear as yet," he said. "It's really hard to say, the reality is that at a local level we are always sizing our business to the size of our business volumes".

Although Ericsson Australia does not operate independently of Ericsson globally, "the impact locally is dependent on the business volume we produce," Malligeorgos said.

Playing down the grim Q1 results, he said the company was actually doing better than expected.

"The results that we put forward were ahead of analysts expectations," he added.

The company out-performing the expectations of analysts will be of little comfort to the 1,200 or so Australian employees of Ericsson, or the remaining 61,000 workers globally.

The Swedish giant had intended to reduce staff numbers to 54,000 by the end of this year, but that number has been revised downwards to 47,000 by the end of 2004. The company already slashed 3,700 jobs in the first quarter of this year.

The 2004 employment figure of 47,000 is a far cry from the 107,000 who worked for the company in 2001.

Ericsson significantly reduced the size of its Australian operation recently when it closed its AsiaPacificLab research and development laboratory, resulting in around 450 job losses.