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Last Updated: Friday, 18 July, 2003, 07:04 GMT 08:04 UK
Ericsson losses shrink
An Ericsson T68 Phone
Swedish phone firm Ericsson has reported its ninth quarterly loss in a row - but has come much closer to breaking even than investors had expected, and vowed to return to the black by the end of the year.

The company said it lost 2.7bn kronor ($328m; 206m) before tax but after restructuring costs in the three months to 30 June.

Stripping out the one-off costs, however, the loss was just 200m kronor, well down on last year's 3.1bn kronor in the same period and analysts' expectations of an almost 1.9bn kronor loss.

Ericsson's shares were predicted to start trading more than 10% up on Thursday's closing level.

But the company, which now focuses on networking equipment having separated its handset operations into a joint venture with Sony two years ago, warned that the telecoms market remained gloomy.

Sales in the current quarter would be flat at best, it said, with the global mobile systems market down 10% in 2003 in US dollar terms over the year before.

Sweetness and light

Some observers, used to gloom and doom from Ericsson, found themselves competing for positive comment.

"This is a lovely report," said Thomas Langer at WestLB Panmure in Stockholm, saying he would probably upgrade his official rating on the company to "buy" from "outperform".

"The share price will explode, because of much better operational performance and excellent execution by management in terms of realising savings."

Restructuring, including thousands of job cuts, cost 3.8bn kronor in the quarter, putting the company on target to spend 16.3bn kronor on one-off costs this year as a whole.

At FIM Securities, Jussi Hyoti said the company compared well to both US rival Motorola and giant Finnish neighbour Nokia, which had posted falling profits just 24 hours earlier.

"Their return to profit has been a question mark in the market," he said. "It is a positive signal that they confirm (that goal)."

Dark times ahead?

But not everyone was as impressed, not least by a 28% slide in sales from the same period last year - and by the company's own bleak prognosis for the mobile market as a whole.

Even though the predictions were better than Nokia's warning of a 15-20% slide in network sales in the July-September quarter, the combination means investors may remain cautious.

Mobile handset sales are also a problem, with market share for the SonyEricsson mobile subsidiary improving only modestly.

The joint venture lost Ericsson 200m kronor between April and June.

Julian Hewett, Ovum telecoms advisor
"Hopefully, in the second half of this decade, 3G will start to pick up"

Nokia profits sharply down
17 Jul 03  |  Business
Ericsson cuts 7,000 more jobs
29 Apr 03  |  Business
Yet more losses at Ericsson
03 Feb 03  |  Business

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