Ericsson to cut 5,000 jobs

Ericsson's handset venture with Sony saw a loss of £235m in the quarter

Telecoms vendor Ericsson has announced plans to cut around 5,000 jobs, despite a strong quarterly showing.

The company said in its quarterly earnings report that the cuts will come primarily from its R&D operation, along with temporary workers and consultants. Hardest hit will be workers in Sweden, where around 1,000 face losing their jobs.

Ericsson credited the job losses to cost-cutting measures and a consolidation of its R&D operation.

The cuts come despite what the company described as a solid financial quarter. Sales rose 23 per cent over the quarter and 11 per cent over the year.

However, the handset venture with Sony saw a loss of some €251m (£235m), due primarily to falling consumer demand.

Despite the numbers, Ericsson chief executive Carl-Henrich Svanberg predicted that the company would be able to endure the harsh economic climate.

"Communication is a basic human need. It plays a critical role in the development of a sustainable and prosperous society, and the positive long-term prospects for the industry remain," he said.

"The effects on the global mobile network market should not be that significant, as most operators have healthy financial positions. There is a strong traffic growth and the networks are fairly loaded."