STOCKHOLM, Sweden (AP) - LM Ericsson shares plunged 24 percent Monday after the wireless equipment maker unexpectedly announced it was shedding up to 17,000 more jobs, about 20 percent of its work force.
The world's largest manufacturer of equipment for cell phone networks also reported a net loss of 2.97 billion kronor ($286 million) for the three months ended March 31, compared with a net profit of 424 million kronor for the same period last year.
"It's very much a matter of trying to sweat it out, trying to survive a very hard recession in this industry," new chairman Michael Treschow said at a news conference that was telecast live by the national public broadcaster, Swedish TV.
The Stockholm-based company had predicted that it would achieve an operating profit margin of 5 percent or better this year, but backed away from that Monday, saying it would lose money for a second straight year.
Chief executive Kurt Hellstroem said that lower operator investments on mobile infrastructure had forced the company to push back its expectations to return to profitability "well into next year."
Telecommunications equipment makers have been hard hit as debt-burdened operators cut spending due to the slow introduction of third-generation technology, which offers transmission speeds nearly 40 times greater than existing standards with access to Internet services, video and e-mail.
Shares closed at 27.3 kronor ($2.65) each on the Stockholm Stock Exchange, down 24 percent.
Hellstroem confirmed plans to reduce the company's work force by 20 percent to about 65,000 by December 2003, saying the cuts primarily would be in development activities worldwide. Company spokeswoman Aase Lindskog said about 7,000 cuts would come this year with up to 10,000 more in 2003.
Jan Ihrfelt, a telecommunications analyst with Swedbank Securities, said the market was especially disappointed in the forecast for sales of network equipment, but he welcomed the efficiency measures.
"They're the No. 1 in mobile systems," Ihrfelt said. "I think they have all chances to come out of this recession even stronger than before."
The company said it expects wireless industry sales to be down more than 10 percent this year from its previous forecast that industry sales would be flat to 10 percent below the total in 2001. Wireless equipment sales account for around 90 percent of Ericsson's total revenue.
Ericsson had net sales of 37 billion kronor ($3.5 billion) for the first quarter, compared with 55 billion kronor last year.
Ericsson, which had 85,000 employees last Jan. 1 and about 107,000 one year ago, has operations in 140 countries. It recorded its first annual loss last year - nearly 21.3 billion kronor ($2 billion).
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