Report: Ericsson to cut 10% of N. American workforce

Ericsson (NASDAQ:ERIC) is cutting 10 percent of its 14,000 employees in North America, according to a recent report in the Kansas City Star.

The Swedish vendor, which has not formally announced the job cuts, said that employees let ago from the company's North American operations will receive severance packages, though Ericsson spokeswoman Carolyn Curtis told the Star that the cuts were based on annual performance evaluations the company performs. She said that the evaluations led to job loss for the employees ranked in the bottom 10 percent. "It's painful, but it's an exercise we go through ... to ensure we have a high performance culture," she said. Ericsson counted 104,000 total workers worldwide at the end of 2011, according to the company's annual report.

Ericsson representatives didn't comment specifically on questions from FierceWireless about the nature of the job cuts in North America or what kind of employees will be affected.

"We are constantly examining our workforce needs to ensure that we have the best people with the right competencies in the right places to meet the demands of our customers," Ericsson said in a statement to FierceWireless. "This is a process we have always done, and will continue to do, on an ongoing basis. As a company we do everything possible to ensure that we meet the demands of our business while also trying to limit the impact on our employees. However, the result of this review will result in some reductions on our North American workforce."

According to the Star report, 130 jobs in the Kansas City area will be cut.  Ericsson manages the day-to-day operations of Sprint Nextel's (NYSE:S) network, and its operations under the Ericsson Services subsidiary are based in nearby Overland Park, Kan., where Sprint's headquarters are located. However, Curtis told the Star that the job cuts will not affect Ericsson's management of Sprint's network. 

In 2009 Sprint and Ericsson announced a seven-year network outsourcing deal valued at up to $5 billion and involving 6,000 Sprint employees. At the time, the companies said that the transferred Sprint employees will stay with Ericsson in the United States. Last year Clearwire (NASDAQ:CLWR) inked a similar deal with Ericsson for the vendor to manage its mobile WiMAX network.

In the fourth quarter Ericsson posted a net profit of $222 million, down sharply from $651 million in the year-ago period, and well below analysts' expectations, according to Bloomberg. Overall sales inched up just 1 percent to $9.42 billion, but sales in North America fell 27 percent on falling CDMA demand.

For more:
- see this Kansas City Star article

Related Articles:
Sprint announces job cuts as part of reorg
Sprint merges consumer and enterprise marketing, loses four execs
Clearwire to outsource WiMAX network to Ericsson
Network outsourcing: Why the U.S. is an exception
Sprint inks $5B network outsourcing deal with Ericsson

Article updated March 6 with a statement from Ericsson.

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