ERICY warns, Nokia buying op?
Ericsson CEO comments on 1998 results
Business Wire - December 10, 1998 07:52
STOCKHOLM, Sweden--(BUSINESS WIRE)--December 10, 1998--Ericsson's
Chief Executive, Sven-Christer Nilsson, today commented on his expectations
for the full year 1998 results for Ericsson. In a meeting with financial analysts
in Stockholm Sven-Christer Nilsson stated that he expects the full year 1998
income for the company to be somewhat below market expectations. Net sales
for the full year are also expected to be somewhat below market expectations.
"My estimate is based on our view of the continued impact of the global
financial crisis which is effecting demand in some of Ericsson's operations,
including in particular Public Networks. The scope of these effects is reflected
in our internal reports for November, which have just become available. Even
though there are certain general signs of recovery in some Asian markets there
are wider repercussions on global demand, which are now affecting sales and
income. The financial crisis in certain markets and the related general economic
uncertainty, which we have pointed to in our quarterly reports during the year,
is affecting us and emphasizes with renewed strength the need for a
strengthening of the ongoing rationalization programs. In addition there will be
synergies resulting from the introduction of the new organization. All together
this will involve substantial reductions in the number of employees which will
be announced in connection with our 1998 report on January 28, 1999," said
Sven-Christer Nilsson.
"In Mobile phones our operating income during the last months of the year is
negatively affected by the shift in demand towards entry-level phones with
reduced margins. These phones are demanded for the rapidly growing pre-paid
services which now account for one third of the market in Western Europe. In
spite of a strong increase in volumes we have not been able to compensate for
this development in our operating income."
"We continue to see strong growth in mobile systems where we have a
world-leading position. This is an area where demand remains largely
unaffected and where we have a very strong income."
"For next year we expect, as I have earlier mentioned, a slow start of the year
and a development for the whole year below our long term growth objectives.
My expectation regarding Ericsson's long term growth remains unchanged; i.e.,
we shall exceed the market growth. This we will achieve by continued
restructuring at an increased pace and development of our operations in
accordance with our strategies."
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