Ericsson to quit mobile handset production

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Stockholm, Sweden-based Ericsson will outsource 100% of its handset production to Singapore-based Flextronics International. Ericsson, in an earnings call this morning announced that fourth-quarter earnings fell 63%, due in large part, to the failing consumer business. Ericsson will transfer 4,200 employees to Flextronics and lay off between 600 and 700. While more layoffs are expected, an Ericsson spokeswoman in the U.S. said there are no plans to lay off marketing or branding personnel in the U.S.

Ericsson has been losing ground for some time against No. 1 Nokia and No. 2 Motorola in the consumer business and is expected to sharpen its focus on network operators and wireless enterprise efforts.The company's estimated $100 million global consumer advertising account, was handled by Y&R Advertising, New York and London. Y&R lost the account in recent weeks and a review had been stalled, though Bartle Bogle Hagerty, London, was a confirmed contender. The spokeswoman said that Ericsson is going forward with the review and expects a decision soon.

Copyright January 2001, Crain Communications Inc.

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