Walmart and Ericsson Announce Thousands of Job Cuts
Walmart's move is understandable. Brian Cornell was named CEO of Sam's Clubs in April to revamp the struggling chain. It still needs help. Sales at Sam's Clubs fell 0.7% to $11.55 billion in the three months ended October 31, when both Walmart's US and International business posted gains. Sales in the current quarter are expected to be little changed, the company said in its latest earnings release. Meanwhile, Costco (CSCO) reported net sales of $8.26 billion for the critical month of December, the five weeks ended January 3, an increase of 11% from $7.41 billion in the same five-week period last year.
At Ericsson, the 1,500 job cuts follow a pattern from last year, when 5,000 positions were eliminated. Weakening demand has hurt the bottom line of world's largest telecommunications equipment maker as customers have become more cautious about spending. Earnings for the three months ended ended Dec. 31 were 314 million Swedish kronor ($43.4 million), down from 3.89 billion kronor a year earlier. Sales plunged as mobile phone operators in developing nations in central Europe, the Middle East and Africa slashed investments.
The results were below analysts' expectations and shares tumbled in Europe. The outlook is not entirely gloomy for Ericsson, though. Spending in China is expected to remain strong as the world's most populous country vows to speed up development of its 3G networks. Meanwhile. the US government is expected to spend about $78 billion over the next few years upgrading its telecom infrastructure as part of the Obama stimulus plan.
Mass layoff announcements, which became depressingly familiar last year, are back. They may have leveled off some, but they are strong enough to keep unemployment above 10% for some time to come.