The New Nation - Internet Edition

Staff Reporter

Swedish telecommunications equipment maker Ericsson said Friday 4,000 jobs worldwide would be cut as the company reported flat sales for fourth quarter 2007 and a 37-per-cent drop in pre-tax income, according to a message received from Sweden yesterday.

Fourth-quarter sales totalled 54.5 billion kronor (8.56 billion dollars), the same as in the corresponding business quarter 2006.

Pre-tax income was 7.6 billion kronor, down from 12.2 billion kronor in fourth quarter 2006.

Ericsson expected sales in 2008 to remain flat, chief executive Carl-Henric Svanberg told analysts and reporters, adding that "market conditions" were "tougher" for its mainstay network operations.

In 2007, "they started in single digits, but ended flattish," he said, saying the job cuts were necessary to "adjust for a slower market."

Of the 4,000 job cuts, some 1,000 would impact Sweden, "as far as possible through voluntary reductions," Svanberg said, adding that the group aimed to avoid cuts in research and development.

Worldwide the group has 74,000 employees, including some 19,000 in Sweden.

Management planned cost savings of 4 billion kronor due to take full effect in 2009.

Factors attributed to the flat sales for fourth quarter 2007 were "less spending from operators on network infrastructure and a continued weakened US dollar," Ericsson said.

Svanberg also noted that political unrest in emerging markets like Thailand, Bangladesh and Pakistan had halted investments in fourth quarter 2007.

The professional services division that includes a section that manages networks and IT infrastructure for operators and multimedia increased 15 per cent in the fourth quarter.

The multimedia division was still in a build-up phase, Ericsson said.

Ericsson's share price was down 5 per cent in late morning trading.

For full year 2007, sales grew 4 per cent to 187.8 billion kronor, Ericsson said, adding that pre-tax income for 2007 dropped 15 per cent to 30.7 billion kronor.