Ericsson outlined plans for strategic partnership with Singapore-...
Ericsson outlined plans for strategic partnership with Singapore-based Flextronics to complete outsourcing of its mobile phone production. Ericsson said it would focus on technology, design and branding of handsets, with plans for its consumer products division to employ 7,000…
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by year-end, down from 18,000 at end of 2000. Companies said 4,200 Ericsson employees would join Flextronics. Under memorandum of understanding with Flextronics, company as of April 1 will take over Ericsson plants in Brazil, Malaysia, Sweden, U.K., and parts of Ericsson’s plant in Lynchburg, Va. “In light of a significant change in the world market for mobile phones, we have decided to fundamentally change the setup of our business,” said Jan Wareby, exec. vp-consumer products div. at Ericsson. Ericsson also released 4th-quarter and 2000 results, saying sales were up 27% in year to $28.32 billion and up 11% in quarter to $8.5 billion. Ericsson took additional restructuring charge of $830 million related to full outsourcing of its mobile phone production. Ericsson CEO Kurt Hellstrom said results in company’s mobile phone business had remained “unsatisfactory.” He said, “the losses are caused by delivery failure from key suppliers and an inadequate product mix in the entry-level market.” Ericsson expects lower sales for phones in first quarter than previously thought, with forecasts now set at increases of 15%. For 2001, Ericsson is projecting sales growth of 15-20% and operating margin of 6-8%.