Ericsson suffers as carriers focus on mobile broadband

The shift in focus among mobile telecommunications carriers from voice services to mobile Internet brought about a 13% revenue decline for Swedish equipment maker and services provider Ericsson.

Revenue for the three months from October to December 2009 dropped to $8.1 billion, while net income for the quarter plunged 92% to $43.4 million.

This decline prompted the business to raise the target for its yearly cost-cutting programme to about $2.2 billion. The Stockholm-based company also announced that it would be making about 6,500 job redundancies this year – 1,500 more than its previous target. Ericsson currently employs 82,500 staff in total.

In a statement, the company attributed its poor performance in part to the shift in emphasis by network operators away from voice telephony toward mobile broadband investment. "This shift follows the anticipated decline in GSM sales, accelerated by the current economic climate, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks," said Ericsson chief executive Hans Vestberg.

Last week, Ericsson’s sister company Sony Ericsson, the mobile handset maker, posted a fourth-quarter loss of $235 million, a narrow improvement on the $265 million deficit it recorded in the same period the previous year. The company blamed falling unit volumes in global handset sales.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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