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Ericsson to Cut 3,300 Jobs, Stop Production at 2 Plants

March 28, 2001|From Reuters

STOCKHOLM — Swedish telecom equipment maker Ericsson said Tuesday that it is cutting 3,300 jobs and stopping production at two mobile phone plants in Britain in order to slash annual costs by about $2 billion.

The job cuts at Ericsson, one of the world's largest makers of mobile networks and handsets, follow large staff reductions at Motorola Inc., the world's second-biggest mobile phone maker, as a global economic slowdown and slowing consumer demand affect technology companies worldwide.

The moves come on top of the $1.5 billion in projected annual savings from a recent agreement to farm out production of Ericsson phones to Flextronics International of Singapore, starting next month.

Meanwhile Tuesday, Finland's Nokia said it is cutting 300 to 400 people at its network's broadband unit.

Ericsson's job cuts include 2,100 positions at two plants in Sweden and 1,200 at two British plants it hopes to sell.

Ericsson also said it froze all hiring and said it will reduce the number of its 15,000 consultants worldwide, in some areas by more than half.

Ericsson, which will hold its annual meeting today, said it will announce additional measures when it outlines the full program April 20, the day it releases first-quarter results.

Some investors said the cost-cutting package, while welcome, did not go far enough. They said they would like to see Ericsson sell its entire mobile-phone business, including design, research and sales, or find a large Asian electronics firm to be a partner in the business.

Ericsson warned two weeks ago that it would report a loss of $400 million to $500 million in its first quarter instead of breaking even as a global economic slowdown hit both the handset unit and the profitable networks division.

Ericsson's American depositary receipts closed up 88 cents at $6.72 on Nasdaq.

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