While Ericsson said its mobile infrastructure business has seen little impact from the dismal economy, CEO Carl-Henric Svanberg said the vendor would eliminate 5,000 employees as a precaution against a possible downturn in the wireless infrastructure market.
"This is not a telecom crisis--this is a financial crisis that has turned into an economic slowdown," Svanberg during Ericsson's fourth-quarter earnings call. "If we look at our own market, operators are in good shape... So far we've hardly seen any effect at all on mobile network investments. We're seeing effects on the fixed side. People are abandoning their fixed-line phones, but they are keeping their mobiles."
Ericsson reported a 23-percent increase year-over-year in fourth-quarter revenue, though its profits experienced a 39-percent drop, mostly attributed to heavy declines in its handset joint venture with Sony. The handset market may be hurting, but network infrastructure growth isn't, Svanberg said. Growth is particularly strong in the US, where data consumption is growing thanks to the iPhone 3G and other smartphones. Ericsson reported fourth-quarter sales growth of 13 percent in North America and 34 percent growth for the fiscal year. In the US, Ericsson is building T-Mobile's new high-speed packet access (HSPA) network as well as expanding and upgrading AT&T Mobility's network.
"It's all being driven by the consumer demand for mobile broadband," Svanberg said of the North American market. "Everybody wants mobility wherever they are now, and there's a lot of focus on the continued rollout of HSPA and expansion."
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