Sweden's Ericsson posts 31 percent drop in 4th quarter profit, to slash 5,000 jobs

Sweden's Ericsson posts 31 percent drop in 4th quarter profit, to slash 5,000 jobs

STOCKHOLM, Sweden (AP) -- Wireless equipment maker LM Ericsson on Wednesday reported profits dropped 31 percent in the fourth quarter, citing restructuring charges and weaker handset sales, and said it would slash 5,000 jobs.

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Still, Ericsson said its core infrastructure business was not yet feeling the effects of the global economic downturn, and its better-than-expected report sent shares up more than 10 percent to 62 kronor in Stockholm.

Net profit in the quarter fell to 3.9 billion kronor ($465 million) from 5.6 billion a year earlier.

Ericsson said the results included about 3 billion kronor in restructuring charges and "a dramatic drop" in the contribution from its handset unit, Sony Ericsson. The joint venture with Japan's Sony last week said it had swung to a fourth-quarter loss of euro187 million ($243 million).

Sales received a boost from a weaker krona, rising 23 percent to 67 billion kronor, from 54.5 billion kronor a year earlier. SEB Enskilda analyst Mats Nystrom said the strong sales were the biggest surprise in what he called a "really good quarter" for Ericsson.

The world's leading maker of mobile broadband infrastructure said it released the fourth-quarter report a week ahead of schedule because it exceeded market expectations.

Chief Executive Carl-Henric Svanberg said the economic recession spreading around the world had not yet hit the network industry. Telecom operators, who build their networks with equipment from Ericsson and its competitors, still have healthy finances, he said.

"It remains, however, difficult to more precisely predict to what extent consumer telecom spending will be affected and how operators will act," Svanberg added. "To date, our infrastructure business is hardly impacted at all, but it would be unreasonable to think that this would be the case also throughout 2009."

Nortel Networks Corp., once one of Ericsson's biggest competitors, last week filed for bankruptcy protection in Canada and the U.S., becoming the first major technology company to take that step in the economic downturn.

Ericsson said it needs to widen its savings program to stay competitive. That would mean cutting 5,000 jobs, or more than 6 percent of its 79,000-strong work force, Ericsson said.

The Stockholm-based company said it expected restructuring charges of 6 billion-7 billion kronor, yielding annual savings of around 10 billion kronor by the second half of the year.

In a webcast news conference with analysts and journalists, Svanberg said "we're doing this of course because of the uncertainty in the market."

Ericsson said full-year profits fell 48 percent to 11.3 billion kronor in 2008, from 21.8 billion kronor in the previous year. Sales grew 11 percent to 209 billion kronor.

Where the $825 billion will -- and won't -- show up in your life.

Where the $825 billion will -- and won't -- show up in your life.

With our first glimpse into how the government wants to use $825 billion to juice the economy, it's clear that some of the money will quickly and directly affect most Americans lives, while other spending is intended to produce either longer-term, less tangible benefits or is targeted at narrow segments of the population -- like the unemployed.

Although the sum is huge, the money isn't intended to turn the economy around, but to keep it from falling even further into decay.

Detractors say spending on stimulus will do little more than drive the country deeper into debt. Many Republicans are arguing for a plan heavier on tax cuts and lighter on government spending.

But supporters -- including most Democrats and the president -- say it would ultimately cost the U.S. more -- in the form of lost jobs, economic output, and lost tax revenues - to drag our feet. They want the plan enacted quickly.

Here's how some of the billions in the House stimulus bill could change your life.

This is not a complete list of the spending, and the numbers are approximate and will likely change before any bill is enacted.

Your Paycheck

What You'll See:

$145 billion in tax cuts for working individuals.

The tax cut would be $500 per person ($1,000 for a couple) and would phase out for people making over $75,000 a year ($150,000 for couples). You can get the money either by claiming it on your tax return, or through a reduction in the taxes that are taken out of your weekly paycheck.

This is the largest single measure in a tax package that includes additional cuts for businesses large and small, as well as expanded credits for low income individuals.

For the Unemployed:

$43 billion for increased unemployment benefits.

$39 billion for expanded healthcare benefits for the unemployed.

$20 billion to increase food stamp benefits.

Education

What You'll See:

$41 billion for school improvements, including better buildings, computer upgrades and teacher training.

$15 billion to increase the maximum Pell grant by $500 in 2009-10; plus, increases to the annual unsubsidized Stafford Loan limits.

$14 billion in tax credits of up to $2,500 a year for college students with an annual income below $80,000.

$6 billion for college building improvements.

Behind the Scenes:

$79 billion to help states offset education costs. While people won't see this directly, it will likely mean that services won't have to be cut or taxes won't have to be raised.

Health Care

What You'll See:

$4 billion for more preventative care programs.

$1.5 billion for improvements at community health centers.

Behind the Scenes:

$20 billion to computerize health care records. This is intended primarily for doctors, although there's some debate as to whether patients will have access to this database as well. Ultimately, it's supposed to make the healthcare system more efficient and cheaper for everyone.

$87 billion for states to help pay Medicaid costs. Again, while not directly visible to most people, state taxes would likely rise, or services cut, absent this measure.

Housing

What You'll See:

$6 billion to weatherize moderate income homes, making them more energy efficient.

$4 billion for homeowners to take up to 30% of the cost of conservation measures as a tax credit, up to $1,500 per person.

$300 million for consumers to replace old appliances.

$500 million to help rural families secure mortgages.

For Those Living in Public Housing:

$16 billion in energy retrofits and improvements.

Transportation

What You'll See:

$30 billion for highway and bridge construction projects.

$10 billion for mass transit, including new lines, buses, trains and stations.

$3 billion to expand congested airports.

$1.15 billion for better land and sea ports.

$4 billion for more police officers and equipment - best watch the speeding!

$500 million for better airport screening detectors.

Other Infrastructure Improvements

What You'll See:

$31 billion to modernize public buildings, making them more energy efficient.

$3.1 billion for improvements on public lands, including new roads, trails and facilities at national parks.

$6 billion for broadband Internet access in rural areas.

$400 million for flood control efforts, which include buying and preserving open land around the country.

$6 billion for communities to replace aging sewer lines.

$4.2 billion for towns to purchase and rehabilitate foreclosed, vacant homes.

$32 billion for a "smart" utility grid and renewable energy production, although in the long run this could change the way you use appliances at home and clean the air.

$10 billion for science research facilities.

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