Sony Ericsson and ST-Ericsson axe 800

An estimated 800 people are set to lose their jobs in Lund in southern Sweden as mobile phone maker Sony Ericsson and wireless technologies firm ST-Ericsson announce new staff cutbacks.

Sony Ericsson and ST-Ericsson axe 800

Both full time staff and consultants are to be affected by the lay-offs.

Sony Ericsson announced plans in mid-April to slash 2,000 jobs worldwide after posting a loss of €293 million ($384 million) in the first quarter of 2009.

160 Sony Ericsson employees in Lund were given notice of redundancy on Friday. A further 150 consultants are also being forced to leave, on top of the 100 consultants who already left in April, the company said.

Sony Ericsson also warned that further redundancies were to be expected in Sweden.

Local media in southern Sweden further reported that ST-Ericsson plans to fire some 400 members of staff, most of whom are located in Lund.

ST-Ericsson was formed earlier this year as a merger between Ericsson Mobile Platforms and ST-NXP Wireless.

“There was talk of 2,000 after the quarterly report and Lund makes up almost half the global workforce. So 400 is maybe at the lower end of the calculations,” said Ulf Bengtsson, chairman of the Swedish Association of Graduate Engineers and head of the organisation’s local chapter in Lund.

“But the entire situation is threatening. We had a first quarter that cost us 35 million kronor ($4.5 million) a day if my mental calculations are correct, and things won’t be good unless we can alter that development,” he added.

Bringing down wage costs was not the answer, said Bengtsson.

“All the company’s employees could work for free and we would still be running a loss. So we have to bring down our production and component costs, while also seeing a rise in volumes.”

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Ericsson profits double on sale of Sony stake

The Swedish telecommunications equipment maker Ericsson posted Wednesday a first quarter net profit that was more than double the level recorded a year earlier, owing to a major one-off divestment.

Ericsson profits double on sale of Sony stake

The world leader in mobile telephone networks also said sales had fallen by four percent to 50.97 billion kronor ($7.6 billion), while operating profit excluding the sale of its half the joint venture Sony Ericsson was 56 percent lower at 2.8 billion.

Net profit leapt however by 116 percent to 8.8 billion kronor thanks to a 7.7 billion kronor contribution from the sale of a 50-percent stake in Sony Ericsson, a statement said.

Meanwhile, “sales of high-performance mobile broadband developed well in North America, Japan and Korea, while other regions such as Europe including Russia, parts of Middle East and India were weaker,” chief executive Hans Vestberg said.

Cheuvreux analyst Odon De Laporte highlighted an increase in Ericsson’s gross margin since the fourth quarter of 2011.

Gross margin is the percent of total sales that a company retains after taking into account the cost of their production and associated services.

“Sure, the report shows there is low activity, especially for the network division, but seeing the gross margin bouncing back is definitely a relief,” Laporte was quoted by Dow Jones Newswires as saying.

Ericsson’s gross margin climbed to 33.3 percent in the first three months of the year, from 30.2 percent in the fourth quarter of 2011, but remained below the 2011 first quarter level of 38.5 percent.

On February 16, Sony said it had finalised the acquisition of Ericsson’s share of their mobile telephone joint venture Sony Ericsson, which was renamed Sony Mobile Communications.

The transaction, which had a total value of 1.05 billion euros, included patents and licenses.