The Ides of March hit the telecom space last week as vendor after vendor announced layoffs and subdued forecasts, indicating that the leash on the economic drift continues to lengthen.
Swedish equipment maker L.M. Ericsson turned on last week’s layoff heat with the news that it would ax 3,300 jobs; Nokia Corp. would cut between 300 and 400; Nortel said it would lop off 5,000, while chipmaker Conexant has lined up more than 1,500 workers for the jobless market.
In tune with practice, the layoffs were announced as part of elaborate programs to trim the company to the right size and energy to outlast the economic crisis, which has become the fall guy of persistent blames in the industry.
Ericsson, which has had problems with its handset business, said the downsizing was part of what Kurt Hellstrom, its chief executive officer, called “the efficiency program,” which he described as “key for us to achieve a solid financial performance in difficult times.”
The job cuts will affect offices in Sweden and Britain. About 1,800 of the jobs will be in fulfillment of its promise during its earnings report last January to prune down staff in its handsets division from 9,800 to 7,000. It will cut its workforce in Kumla, Sweden from 3,200 to 1,700.
Its Linkpong plant in Sweden, which will be outsourced to Flextronics, will lose 600 jobs, leaving 3,600, said the company.
The cost-cutting measures, which also will include shutting down two plants in its U.K. mobile-phone operations, are intended to save the company $2 billion.
The company also announced a recruitment freeze in all divisions and a reduction in the number of consultants.
“In today’s uncertain state of the economy with negative signals, Ericsson must react, and we are now taking necessary measures,” said Hellstrom. “We have to drive efficiency much harder, with the dedication to become more competitive than ever before.”
Nokia is laying off between 300 and 400 staff in its network units, barely two months after it announced it was closing down some plants in Irving, Texas, as part of its effort to strengthen its production bases in Mexico and Asia.
The purpose of the 400 job cuts, said Nokia, is to sharpen its high-speed Internet broadband systems division, which it will name Broadband Access and Narrowband Access.
“The division plans to concentrate its activities in two business units in order to meet future customer needs,” Nokia said.
The cut will affect research and development staff as well.
Nortel Networks, which entered the year riding the bull market, has shown weakness since it revised its first-quarter earnings forecast. Last week, it added to the bad news with the announcement that it would lay off 5,000 more workers by mid-2001 as a measure to cut costs. The company said the flagging economy and pricing pressures forced Nortel to slash its first-quarter estimates from $6.3 billion to between $6.1 billion and $6.2 billion.
Two firms, Lehman Brothers and Credit Suisse First Boston cut their estimates. Lehman dropped its to 25 cents a share from 47 cents for 2001. Credit Suisse cut its forecast from 65 cents to 20 cents.
However, the company sees light ahead.
“We’re starting to see early signs of hopefully some stability,” said John Roth, Nortel’s chief executive. “But I wouldn’t call it that yet. If this carries on for three months, then we’ll call it stability.”
Conexant announced it planned to let go more than 1,500 staff owing to a dip in sales of networking equipment and lower sales and earnings.
