Ericsson cutting 5,000 more jobs

Ericsson plans to cut staffing to 60,000 by 2003, rather than its previous target of 65,000. Already, since April 2002, it has cut staffing from 82,000 to 76,000.

This follows a Q2/2002 loss of EUR379.7m (down from EUR1.5bn a year ago) on sales of EUR4.1bn (down 31% on a year ago, but up from EUR4.0bn in Q1/2002).

The telecom and wireless downturn is showing scant signs of a turnaround, says CEO Kurt Hellström. "We will continue reducing our costs until we can break even at sales levels around SEK120bn [EUR13bn]," he says. "By the end of next year, we believe we will have a low enough cost base to return to profit."

At end-June, long-term liabilities were SEK37.4bn and current liabilities were SEK85.3bn. Ericsson plans to repay up to SEK22bn (EUR2.38bn) worth of debt over the next six quarters: SEK8bn worth of short-term debt and SEK14bn in long-term loans.

In the meantime, Ericsson wants to sell 8bn new shares to raise EUR3.25bn, a SEK30bn rights issue will be used partly to repay debt. But the plan to sell new shares has angered shareholders as it will significantly dilute the value of its shares.