Ericsson Posts $332.3 Million Quarterly Loss,
Warns of Difficult Mobile Market This Year
A WALL STREET JOURNAL ONLINE News Roundup
STOCKHOLM -- Telefon AB L.M. Ericsson Friday reported a fourth-quarter net loss of 3.5 billion Swedish kronor ($332.3 million or 377.6 million euros) and warned that it still expects conditions to be difficult in the mobile-communications market in 2002.
Ericsson's fourth-quarter loss -- which compares with a net profit of 2.25 billion kronor in the year-earlier period -- closes the book on a year in which the Swedish company, the world's largest manufacturer of equipment used in mobile-telephone networks, posted its first-ever loss. Its full-year net loss was 21.3 billion kronor.
Although it warned of difficult market conditions this year, Ericsson maintained its target of achieving an operating margin above 5% for the full year.
Ericsson said its fourth-quarter sales fell 29% to 58.5 billion kronor from 82.1 billion kronor in the fourth quarter of 2000. On a pro forma basis, excluding the phone operations transferred into a joint venture with Sony Corp. last year and other operations that are no longer part of Ericsson, sales were 69.1 billion kronor for the year-earlier quarter, the company said.
Ericsson projected tough market conditions will "persist well into 2002" for the sale of mobile-communications technology. But President Kurt Hellstroem said the company has reshaped itself and now is positioned to profit when the global economy improves.
Ericsson shed 22,100 jobs during the last nine months, arranged licensing agreements that should bolster handset sales and achieved positive cash flow. "We are now in a much stronger position to capitalize on market opportunities and restore profitability in 2002," Mr. Hellstroem said in the earnings report. "Although the market will be particularly challenging in the beginning of 2002, we maintain our objective of over 5% operating margin for the full year."
Cash flow before financing activities was 16.5 billion kronor in the fourth quarter, and 4.2 billion kronor for the year.
Ericsson projected global sales for mobile phones will be about 430 million units this year, up 10% over 2001. The increase will largely be registered in the second half, the company projected.
The company, founded in Stockholm in 1876, is the world's largest manufacturer of equipment used in mobile-phone networks. It operates in about 140 countries and employed 85,200 at yearend, down from 107,300 last March. |
