Ericsson shares were down by 1.6 percent at 70.70 kronor on the Stockholm stock exchange in midday trading.
The Swedish telecom giant, which has some 83,ugg store,000 employees worldwide, said sales had dropped in the fourth quarter owing to cuts in investments by mobile phone operators in a number of markets,ugg outlet, including in developing nations in central Europe, the Middle East and Africa.
Ericsson said the anticipated decline in sales of older GSM networks had accelerated owing to the economic crisis, but was not yet offset by the growth in mobile broadband and investments in next-generation IP networks.
The profit was much lower than expected as analysts polled by Dow Jones Newswires had forecast a net profit of 3.23 billion kronor.
The company estimated that its restructuring programme would cost up to 14 billion kronor and bring annual savings of between 15 billion and 16 billion kronor.
In a sign of the impact of the economic crisis on the telecom industry, Ericsson’s net profit plunged by 92 percent to 314 million kronor (30.7 million euros, 43.4 million US dollars) between October and December.
“Meanwhile, other markets including China, India and the US continued to show good development with major network buildouts,” Vestberg said.
Ericsson cuts 1,500 more jobs, profit plunges
Ericsson announced on Monday an extra 1,500 job cuts under restructuring which bit deeply into fourth-quarter net profit at the firm, the world leader in phone network equipment.
“When the initial (restructuring) programme was announced in January 2009, it was anticipated that the actions would result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden, Ericsson said.
Restructuring costs nearly doubled to 4.3 billion kronor in the fourth quarter, compared to 2.3 billion kronor in the same period in 2008, and for the full year the charges totalled 11.3 billion kronor, the company said.
Sales fell by 13 percent to 58.3 billion kronor in the fourth quarter in the wake of the global economic crisis and growing competition from telecom equipment industry with the rise of China’s Huawei.
“During 2009, operators in a number of developing markets, especially Central Europe, Middle East and Africa,ghd styler, became increasingly cautious with investments, he said.
Ericsson has also suffered from the difficulties at its two joint ventures, Sony Ericsson and ST-Ericsson, which together chalked up charges of 1.46 billion kronor.
“During the second half of 2009, Networks’ sales were impacted by reduced operator spending in a number of markets,” Vestberg said in a statement.
Total announced job cuts are now about 6,500, generating huge restructuring charges with the intention of bringing equally huge cost savings.
“The 5,000 has been exceeded and is estimated to reach approximately 6,500,” the company said in the statement.