Ericsson, which has 1,700 employees in the Republic, priced a $3.25 billion (€3.19 billion) rights issue at a 74 per cent discount yesterday in a move to reduce debt and help it through a period of weak demand.
The Swedish telecoms equipment maker also reported a second-quarter adjusted pre-tax loss of 3.5 billion Swedish krone (€376 million) and warned of continued gloom in the telecoms industry.
Ericsson's shares fell by one-fifth following the announcement, which also included details on 5,000 additional job cuts at Ericsson and the firm's seventh straight quarter of financial losses.
The firm would not comment on whether the job losses would impact on its Irish operations. Ericsson has already made more than 100 staff redundant in the past 18 months at its operations in Dublin and Athlone.
Ericsson said its new restructuring programme would save Skr10 billion and take the workforce to 60,000 by year-end from about 76,000. This is on top of already announced savings programmes that will cut 42,000 jobs over three years by the end of 2003.
Ericsson said it expected a deeper fall in mobile network sales in 2002 than previously but expected to return to profit in 2003.
Pricing the fully underwritten one-for-one issue at Skr3.8, a price not seen on its stock since late 1992, removed one of the main elements of uncertainty hanging over the stock in recent months. But the deep discount sparked speculation that the underwriters had a pessimistic view of the business and would not offer more for the stock.
The announcement drove shares sharply lower.
Ericsson chairman Mr Michael Treschow said the issue price reflected the best judgment of advisers to limit the danger of the issue failing.
Ericsson's results show orders for mobile systems, which rose 11 per cent quarter-on-quarter in the first three months of the year, tumbled 19.3 per cent sequentially in April-June, shattering hopes of better times later this year.
Overall sales rose 4 per cent quarter-on-quarter to Skr 38.5 billion but below the market consensus of Skr40 billion. Its second-quarter adjusted pre-tax loss was Skr 3.5 billion against forecasts of Skr4 billion.
