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Ericsson to axe 3,300 jobs
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March 27, 2001: 1:53 p.m. ET
Swedish cellular maker to cut another 3,300 jobs, see cost savings of about $2B
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LONDON (CNN) - Ericsson, the world's No. 3 mobile phone maker, said on Tuesday it plans to cut 3,300 jobs to stem losses as economic growth slows.
The Swedish firm, the world's largest telecommunications equipment maker, said it will axe 1,500 jobs in Kumla; 600 jobs will go at its Linkoping plant in Sweden and it plans to close two plants in the UK with 1,200 job losses.
 The company said it had started a comprehensive review of its operations and planned to reduce costs "by at least 20 billion crowns ($1.95 billion) by the end of this year."
"In today's uncertain state of the economy with negative signals, Ericsson must react," Chief Executive Kurt Hellstrom said in a statement.
Ericsson (ERICY: Research, Estimates), which has been under pressure to sell its loss-making phone manufacturing business or to implement a radical overhaul of its businesses, saw its stock shoot up more than 12 percent to $6.56 in afternoon Nasdaq trade.
"The company is finally getting to grips with the situation," said Gordon Hodson, European equity strategist at ABN Amro in London. "That along with plans to cut cost has been enough to lift the stock."
Ericsson warned earlier this month it would post a loss of up to 5 billion crowns, or $510 million, in the first quarter of 2001, versus an earlier forecast of roughly breakeven. 
Ericsson said then that the economic slowdown in the U.S. was affecting "all operations," though its mobile-phone handset business was particularly hard hit.
The handset unit has proven to be a major burden to Ericsson, and lost more than $1 billion in the final quarter of 2000. Ericsson plans to exit the manufacturing business, using lower-cost producers to build its products.
It also announced a recruitment freeze and will "substantially" reduce the number of consultants it uses by as much as 50 percent in some areas.
The job losses are the latest to hit the sector. Motorola (MOT: Research, Estimates), the world's No. 2 handset manufacturer, said last week it would cut another 4,000 jobs, bring the total to about 23,000.
Meantime, Finnish rival Nokia said it would cut 300 to 400 jobs in its networks unit as the firm streamlines its broadband systems business.
Ericsson plans to announce more details of its latest review on April 20, the company said. 
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