Ericsson Sees Weak U.S. Market This Year
By Peter Starck , Reuters
Mar 28, 2001 (10:47 AM)
URL: techweb.com
STOCKHOLM, Sweden—Telecom equipment maker Ericsson AB said on Wednesday it expects very weak—maybe zero—growth in the U.S. market this year, undermining investor confidence and sending its ailing share further down. Ericsson's view of the outlook for the United States echoed that of Nortel Networks Corp. (stock: NT), which cut its first-quarter forecasts earlier in the day.
The stock market did not seem impressed by Ericsson (stock: ERICY) saying it was continuing to win market share in the mobile systems segment, where the Swedish company is the global leader.
In 2000, the U.S. telecom market grew by 20-30 percent. Ericsson expects worldwide growth this year in the telecom market of 8-10 percent.
Ericsson's chairman of the board, Lars Ramqvist, told shareholders the board had done all in its powers but been dogged by bad luck.
"The board has been extremely active but we have not had luck on our side," he said.
Ericsson, the world's largest maker of mobile networks and third-biggest handset supplier, has been surrounded by turmoil, including demands for the resignation of two top executives, for the past two weeks following a first-quarter profit warning.
Ericsson warned on March 12 it would take a $400 million to $500 million loss in the first quarter instead of breaking even as a global economic slowdown hit both the handset unit as well as the profitable networks division.
On Tuesday, the company unveiled sweeping cost-cutting measures that it said would generate savings of $20 million a year from 2002, sending the Ericsson stock almost 10 percent higher.
The share, down almost 50 percent year-to-date, shed most of those gains on Wednesday, extending its slide after the gloomy assessment of the U.S. market. |
