Ericsson 4Q Profits Plunge - InformationWeek

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Ericsson 4Q Profits Plunge

The company said its net profits dropped 92% from the previous year's quarter while revenues fell 13%.

Ericsson reported sharply lower sales and profits for its fourth quarter and announced a plan to cut another 1,500 jobs. But the company said Monday its savings plan is expected to trim nearly $2 billion in expenses when the savings plan ends in the second quarter.

The company's new CEO, Hans Vestberg, said the sales decline was anticipated because of the continuing decline in GSM infrastructure buildout and as carriers begin a wholesale shift from voice telephony to mobile broadband. Ericsson recently acquired Nortel Networks' LTE/CDMA operation for $1.3 billion and the deal is expected to give Ericsson a strong headstart in the coming global rollout of LTE networks.

Ericsson said its net profits dropped 92% to $43.4 million from the previous year's quarter while revenues fell 13% to $8 billion.

"We maintained market shares well in all segments, cash flow was good and our financial position was strong," said Vestberg in a statement. "During the second half of 2009, Networks' (units) sales were impacted by reduced operator spending in a number of markets." He cited the "increasingly cautious" markets of Central Europe, Middle East, Africa and some Latin American segments.

However, the U.S., China and India continued "to show good development with major network buildouts," Vestberg added. In the U.S. Ericsson has a major contract with Verizon Wireless to provide infrastructure for the carrier's LTE network.

Vestberg, who took over Ericsson's CEO post earlier this month, noted that the 1,500 new job cuts will be added to the 5,000 cuts announced earlier. The company has about 80,000 employees worldwide.

In November, Ericsson announced that it had completed its acquisition of Nortel Networks' CDMA business and LTE assets.

The acquisition calls for the transfer of important CDMA contracts with North American carriers including Verizon Wireless, Sprint Nextel, U.S. Cellular, Bell Canada, Telus, and Leap. Valuable CDMA and LTE patent licenses are also transferred to Ericsson in the deal.

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