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Friday, 26 October, 2001, 07:14 GMT 08:14 UK
Earnings shock for Ericsson
Ericsson phone
Handset sales were dramatically lower
Ericsson has launched an investigation into how its financial results came to be leaked.

News of the worse-than-expected losses broke the night before the Swedish telecoms firm's official announcement and shocked the markets.

Also leaked ahead of schedule was news that the firm has replaced its chairman and fomer chief executive Lars Ramqvist with the current chairman of Electrolux, Michael Treschow.

Ericsson issued a statement saying it had begun an investigation "in order to ensure our integrity".

Ericsson, whose shares are listed in Stockholm and on Wall Street's Nasdaq index, said the leak forced it to bring forward its announcement "to provide the financial market with the full financial statement after speculations occurred".

Job cuts fail to halt losses

The Swedish mobile phone giant said that losses in the three months to September rose to about 5.8bn Swedish kronor ($550m; 385.6m), compared to a profit of 4.1bn kronor a year earlier.

The loss is signifcantly higher than the 4.5bn kronor expected.

Ericsson is on track to report its first annual loss in more than 50 years, despite drastic cost-cutting that has included 22,000 job losses.

Chief executive Kurt Hellstrom told the Reuters news agency that while the "efficiency programme" was not finished yet, there were no plans for additional rounds job cuts.

'Time to leave'

Mr Ramquist said his departure came because, "after 22 years in the company's top management and after 12 years as Director of the Board, it is time to leave the chairmanship".

The company said that it expected the telecommunications market to remain difficult well into next year.

Handset sales were almost halved to 8.3bn kronor from 14.3bn kronor in the the same period a year earlier.

And overall sales are forecast to drop 10% next year due to the downturn in the sector.

Swedish newswire Waymaker was the first to post the results, well ahead of their official publication date.

 WATCH/LISTEN
 ON THIS STORY
The BBC's John Mervin
"Ericsson has failed to give the markets much reason for optimism"
See also:

20 Jul 01 | Business
Ericsson relieves tech investors
20 Apr 01 | Business
Fears for UK Ericsson jobs
20 Apr 01 | Business
Ericsson cuts 12,000 jobs
20 Apr 01 | Business
Why Nokia is winning the phone war
25 Oct 00 | Business
The m-commerce money game
19 Apr 01 | Business
Sony and Ericsson in mobile talks
17 Apr 01 | Business
Ericsson to cut more jobs
27 Mar 01 | Business
Ericsson and Nokia cut jobs
26 Jan 01 | Business
Ericsson to stop making mobiles
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