Ericsson warns of £350m losses

In line with the downturn in the global high-tech industry, Ericsson admitted sales of its telephone equipment will be lower than expected. A drop in orders from the US and delays from western European customers have hit the company particularly hard. Ericsson had previously predicted it would break even in Q1.

In a statement released today the world's largest wireless equipment manufacturer also said sales of mobiles will drop considerably from the previous year, revising its earlier prediction that sales would grow 15 per cent.

A statement issued by the company said: "In addition to the ongoing comprehensive restructuring program in Consumer Products and a hiring freeze in our largest division, Mobile Systems, we will rapidly review further measures to reduce costs and improve capital efficiency."

Earlier this month Motorola was forced to stop production at its Scottish manufacturing plant for two weeks following a dramatic drop in sales.

A recent research report from Gartner Dataquest warned telecoms manufacturers will have a tough time this year. Dean Eyers, telecommunications group VP at Gartner, said: "We expect slowing demand for services, reduced and delayed investments in networks and applications; patching rather than overhauling or replacement of enterprise networks and the disappearance of some customers."