L.M. Ericsson Telephone Co. cut its forecast for the year and said it would slash up to 20,000 more jobs as part of further cost-cutting measures as it reported another quarterly net loss.
The Stockholm telecommunication-equipment vendor doesn't foresee a return to profit until 2003, and expects its most important market, the mobile-systems market, to be down over 10 percent this year as telecommunication operators worldwide continue to curb investment, it said in a statement Monday.
Ericsson in January said it would be profitable this year and estimated a smaller 0 to 10 percent decline for the mobile systems market.
To combat the downturn, Ericsson said it will cut costs by 10 billion kronor (US$971 million) this year and another 10 billion kronor next year. These cost savings are in addition to the efficiency program Ericsson launched in 2001, which is now yielding 20 billion kronor (US$1.94 billion) in annual savings, according to the company.
Part of the savings will come from job cuts. About 10,000 staff will be made redundant this year and another 10,000 next year, bringing Ericsson's workforce down to about 65,000 by the end of 2003, a spokesman said. The cuts will be made across the company and around the world, he said. Last year Ericsson cut its workforce by over 22,000.
Ericsson also plans to sell shares worth 30 billion kronor to clean up its balance sheet. An extraordinary shareholder meeting has been called for June 6 to authorize this rights issue. Two of the biggest shareholders support the offer, Ericsson said.
Ericsson reported a first-quarter net loss of 3 billion kronor, down from a net profit of 400 million kronor last year, an Ericsson spokeswoman said. However, last year's figure included a pretax 5.5 billion kronor gain of the sale of Juniper Networks Inc. shares, she said. Net sales in the period were 37 billion kronor, Ericsson said.