ACTION PROGRAM WITHIN ERICSSON PUBLIC TELECOMMUNICATIONS: IMPROVED PROFITABILITY FOR FUTURE INVESTMENTS; UP TO 6,000 EMPLOYEES LEAVE BUSINESS AREA, MANY TRANSFER TO RADIO COMMUNICATIONS BUSINESS AREA.

STOCKHOLM, Sweden--(BUSINESS WIRE)--August 31, 1995--Ericsson is moving to strengthen its position in public telecommunications. The Public Telecommunications Business Area is now implementing a concentration of resources to core operations based on the world-leading AXE system and development of broadband solutions. Rationalization measures could result during 1995-1996 in a reduction in the number of employees in the business area by up to 6,000 in Sweden and abroad, from 30,000 to 24,000. A substantial number of employees will transfer to the Radio Communications Business Area which is growing rapidly.

The action program is part of the necessary rotation of personnel within Ericsson which was announced in June 1995. The Ericsson Group management then stated that 20 000 out of Ericsson's 80 000 employees will have to change job assignments in the years immediately ahead.

Currently, the earnings trend within Ericsson's Public Telecommunications Business Area is unsatisfactory. Nevertheless, the AXE operations within the business area continue to be very favorable in terms of earnings. In order to remain competitive, the pace of the continuous rationalization measures within the AXE operations must be accelerated.

Within the Public Telecommunications Business Area, about 2,700 employees in production units in Sweden are now affected. In the other operative and administrative activities in Sweden, about 1,500 employees are affected. Personnel in the Stockholm area will primarily be the object of the reductions. Co-determination negotiations with the trade unions have begun regarding the previously announced changes now being specified.

The personnel reductions within the AXE operations apply mainly within the delivery chain. The efficiency of product development activities will be enhanced through rationalization measures, but these operations will not be subjected to personnel reductions due to the increased efforts in this area.

In broadband operations, the market is developing at a slower pace than generally expected. Ericsson is now focusing to a greater extent on the areas which are closest to its core operations, while at the same time cooperation with partners will increase to respond to customer demands for total solutions in the broadband area.

In order to facilitate personnel transfers, the Radio Communications Business Area will establish operations in southwest Stockholm.

Non-core operations - which cannot be conducted profitably within Ericsson - shall, if possible, be divested to external partners. This outsourcing could affect about 2,200 of today's employees within the Public Telecommunications Business Area in Sweden and an additional significant number outside Sweden.

Through concentrated efforts in core operations, combined with rationalization measures and outsourcing, Ericsson will be strengthening its position as a world leader in narrowband applications and develop a leading position in the broadband area when the market accelerates.

"These extensive reductions are necessary in order to be able to cope with stiffening competition and to ensure that we become increasingly stronger in public telecommunications," Anders Igel, Head of Business Area Public Telecommunications, says. "We foresee that a large percentage of the personnel we may release within the business area can be offered work, primarily within the Radio Communications Business Area."

"We are also seeking other solutions to soften the effect of the reductions for the individual employee. Termination notices will be avoided to the greatest possible extent, but this possibility cannot be eliminated."

"The measures will create scope for continuing technical investments and market expansion," Anders Igel concludes.

Ericsson's 80,000 employees are active in more than 100 countries. Their combined expertise in switching, radio and networking makes Ericsson a world leader in telecommunications.

CONTACT: KATHY EGAN, LARS JONSTEG, 212/685-4030