Ericsson Sacking 5,000 Just in Case
Ericsson is one of those glass half-empty companies. Though it reported better-than-expected fourth-quarter financials and seems confident in the resilience of its business during the downturn, the telecom equipment giant is sacking some 5,000 employees. Better to competitively position the company for a turbulent year ahead than wait for the econalypse to turn you into the next Nortel (NT), right?
Not that there’s any chance of that happening. Sure, Ericsson (ERIC) suffered a 31 percent drop in fourth-quarter net profit, thanks to “a dramatic drop” in the contribution from the Sony Ericsson handset division, but its infrastructure business is solid and the company has a fair bit of cash on hand. “Our net cash position has considerably improved,” said CEO Carl-Henric Svanberg. “Cash is important, and we are very happy with the cash position that we have. We are in fact the only vendor that has positive net cash, and that is a strategic asset….We cut costs to maintain our competitiveness in tougher times. We see no slowdown for Ericsson, but all industries will be affected.”
Well, that’s a reassuring remark. Not quite as reassuring as it might have been, though. After all, the company notably failed to offer a specific business outlook for 2009.