Ericsson Posts Narrower 3Q Loss - InformationWeek

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Ericsson Posts Narrower 3Q Loss

Company officials say the two-year slump that has affected makers of wireless phone networks appears to be ending.

STOCKHOLM, Sweden (AP) -- LM Ericsson, the world's largest supplier of equipment for wireless phone networks, posted a narrower third-quarter loss Thursday and said the battered industry was starting to recover.

Chief executive Carl-Henric Svanberg said the two-year slump in demand that affected wireless phone networks makers has started to show signs of ending.

Ericsson's "gradual shift in focus from financial restructuring to business development leads us to believe that the market is stabilizing and that the dramatic market decline is behind us," Svanberg said.

Earlier this month, Jorma Ollila, CEO of Finland-based Nokia, said growth was beginning to take place. Patricia Russo, CEO of Lucent Technologies--which this month posted its first quarterly profit since March 2000--said her company also was becoming more optimistic about the future.

Ericsson, which has not posted a profit since 2000, lost 3.9 billion kronor ($505.3 million), or 0.25 kronor (3 cents) a share, in the July-September period compared with a loss of 5 billion kronor, or 0.41 kronor a share, a year ago.

By the company's internal measuring, it earned 1 billion kronor ($129.5 million), in contrast to a loss of 3.6 billion kronor a year ago--the first time in 11 quarters the company was in the black on that basis. Those figures excluded taxes and a 5.4 billion kronor ($699.7 million) restructuring charge in the third quarter.

Analysts had predicted a pretax profit of 410 million kronor ($53.1 million).

Net sales for the quarter fell 16 percent to 28 billion kronor ($3.6 billion) from 33.5 billion kronor in the same period a year ago.

Ericsson said sales improved in Asia and Latin America, but were down in Europe. In the Middle East and Africa, sales "continued to develop favorably."

The company has been cutting jobs for the past two years amid the slump in demand from its telephone-operator customers. It currently has more than 53,000 employees, down from 107,000 at the start of 2001, and expects to be at 47,000 next year.

"Ericsson is back to profit, which is an important milestone, but a lot still remains to be done before we reach good profitability," Svanberg said.

Ericsson said it was seeing signs of gradual recovery throughout the industry.

"We expect the mobile systems market in 2004 to be in line with 2003," the company said, but added that it expected its own fourth-quarter sales to increase.

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