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Ericsson Cuts 12,000 Jobs, Reports Q1 Earnings

LONDON -- Ericsson has expanded its operational review, which was expected to see 12,000 jobs go by the wayside (including 1,200 at manufacturing plants in the UK), as it published first-quarter results showing a 5% decrease in sales and orders. The figures were in line with the companys revised expectations announced last month, and were partly attributed to "further weakening of the mobile phones business."

The company's efficiency program, with the aim of saving over 1.4 billion pounds, could now affect as many as 10,000 more worldwide employees, with the majority of those affected located outside of Sweden, as well as more phone operations job losses, to take the number of handset employees to less than 5,000. The company is also set to slash the number of consultants it employs by up to half in some areas of business; Ericsson currently has 15,000 consultants on its books.

Nokia, on the other hand, announced better than expected results, as net sales jumped up 22 percent to Euro 8 billion (5 billion pounds),partly driven in part by Nokia Mobile Phones sales growing by 20 percent to Euro 5.8 billion (3.6 billion pounds) as, according to the company, "Nokia's volume growthincreased at more than twice the rate of the overall market." It certainly seems as though Nokia might well be profiting from the decision of some of its competitors such as Ericsson to pull out of handset manufacture. The company's pro forma operating profit also increased by 8 percent to Euro 1.4 billion (0.8 billion pounds).

The difference in the results does not, however, appear to equate to a difference in the companies' expectations of next-generation devices. "In the overall 3G mobile network infrastructure market we believe Nokia has the extraordinary opportunity to achieve twice the market share reached in the second generation," stated Nokia Chairman and CEO, Jorma Ollila, while his counterpart at Ericsson, Kurt Hellstrom, said, "We are well positioned to provide the technical solutions that will bring the next generation of mobile communications to the world. There should be no doubt about the strong demand for 3G. It is driven by the need for increased voice and data capacity, along with the emergence of the Mobile Internet. We anticipate a strong subscriber take-up of GPRS during the second half of this year, followed by a similar take-up of volume 3G services during 2003."

The me-too mobile battle is not restricted to handset manufacturers and network suppliers: according to Forrester research published earlier this year, Europe's mobile phone networks will be controlled by five dominant players by 2015, among which BT Cellnet, Vodafone and Orange are likely to be counted. Vodafones announcement earlier this week that it had made the first 3G voice call, has since sparked some interest among these other two players, who have responded by insisting that the case might not be as clear as it seems.

BT for instance is set to roll out the world's first 3G network in the Isle of Man through its Manx Telecom subsidiary soon, and BT Cellnet also reckons to have made a 3G call last month. Orange likewise, made the first mobile video call as part of its UMTS trials back in June 1999, although this was not made using current UMTS standards, and was also made from a specially-equipped Transit van, as opposed to with a prototype handset as was Vodafones case.



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