2 tech giants cut jobs

FRANKFURT, Germany -- Two European technology giants, German chipmaker Infineon and Swedish cell phone equipment maker Ericsson, announced deep new job cuts Tuesday as they struggled to cope with weak investment spending by companies.

Ericsson said it would cut 7,000 workers -- 11 percent of its more than 60,900-strong work force -- as it announced a quarterly loss of 4.3 billion kroner ($516 million) for the quarter ending March 31. Infineon announced that it would cut 3 percent of its work force, or 900 jobs.

"We have to start making a profit again," Infineon chief executive Ulrich Schumacher said of the decision.

Ericsson chief executive Carl-Henric Svanberg said he was optimistic his company could return to profitability this year, and said more cost-cutting initiatives -- including further job cuts -- were on the way.

"We are heading in the right direction, but a lot more can be done to simplify our way of working and further reduce costs," he said.

Both companies have suffered from reduced investment by business customers in computer and phone equipment, which started as a hangover from the collapse of the technology boom of the late 1990s.

Stockholm-based Ericsson, the world's biggest supplier of network equipment, has seen mobile operators cut spending on their existing networks, and delay or scale back plans for newer, faster networks. The company expects network sales to fall 10 percent this year.

In Infineon's case, the ongoing slump in spending on new computers sent the prices of its key DDR, or double-data rate, chips below the cost of production in the first three months of the year. That resulted in a 328-million euro ($354 million) quarterly loss.

The global semiconductor market shrank by 3 percent in the quarter, the company said.

Infineon is cutting 900 of its roughly 31,000 jobs -- 500 of them administrative positions and 150 in its cell phone division. Outsourcing and consolidating some other operations will eliminate the remaining 250 jobs, it said.

While both companies are exposed to a generally weak global economy, they haven't been helped by anemic economic growth in Europe, leading to a spate of job-cutting announcements in recent months.

"Unfortunately, growth is not enough to give a palpable impulse to the labor market," said Stefan Bielmeier, an analyst tracking the European economy at Deutsche Bank in Frankfurt. "You should not expect an improvement in employment before the end of this year."

Schumacher acknowledged Tuesday that the company is considering moving its headquarters out of Germany. The nation is now in its third year of near-zero growth, and has high taxes and labor laws that guarantee employees a significant say in how businesses are run.

"Relocating the company's headquarters to Switzerland is awaiting a final decision," he said, but added that the company also was evaluating locations in Asia, the United States and elsewhere in Europe.

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