Ericsson to take $231 million charge on job reductions

Swedish equipment vendor Ericsson says it has completed its planned reduction of operations in Sweden, slashing 1,399 positions and laying off 919 employees.

The costs of the exercise are expected to run to approximately SEK1.5 billion ($231 million), which will have an impact on the company’s next set of quarterly results.

Ericsson says the redundancies affected all sites in Sweden apart from Falun, Hudiksvall, Kalmar and Katrineholm.

But Ericsson’s premises in Stockholm bore the brunt of the cutbacks, losing 569 employees.

Swedish equipment vendor Ericsson says it has completed its planned reduction of operations in Sweden, slashing 1,399 positions and laying off 919 employees.

The costs of the exercise are expected to run to approximately SEK1.5 billion ($231 million), which will have an impact on the company’s next set of quarterly results.

Ericsson says the redundancies affected all sites in Sweden apart from Falun, Hudiksvall, Kalmar and Katrineholm.

But Ericsson’s premises in Stockholm bore the brunt of the cutbacks, losing 569 employees.

The reductions covered all job areas and mainly affected Ericsson’s Networks division.

Ericsson (Stockholm, Sweden) first announced the cutbacks in November, when it said that 1,550 Swedish positions would be subject to notice.

The company said the pruning was necessary to reduce costs and drive commercial excellence and operational effectiveness.

“It is naturally a difficult message for our employees in Sweden,” said Tomas Qvist, the head of Ericsson’s human resources in Sweden, in November. “We must ensure that we can continue to execute on our strategy to maintain our market leadership, invest in R&D and meet our customers’ needs.”

For the final quarter of 2012, Ericsson reported a year-on-year increase of 5% in revenues, to SEK66.9 billion, but slid to a net loss of SEK6.3 billion, from a profit of SEK1.5 billion in the fourth quarter of 2011.

The vendor blamed operating losses at ST-Ericsson, its joint venture with semiconductor maker STMicroelectronics (Geneva, Switzerland), for the setback.

Earlier this month, Ericsson and STMicroelectronics announced plans to wind up the joint venture.

As part of that process, Ericsson said it would take on 1,800 workers previously employed at ST-Ericsson and assume responsibility for the design, development and sales of LTE multimode thin modem products.