re: Ericsson Q3
In a nutshell ...
>> Ericsson - Losses Higher, New Boss, Results Leaked - Not A Good Day
Cellular News
October 26, 2001
Ericsson is to hold an investigation into how its financial results were leaked to Reuters, before they were due to be published this morning.
Ericsson also decided to formally release it figures following consultation with the Stockholm Stock Exchange and Nasdaq to ensure that the markets have the full figures.
The company has posted higher than expected losses of US$550 million on sales of US$5.19 billion in the third quarter of this year. Ericsson says that orders and sales were affected primarily by the drop in Latin America, by lower systems sales and reduced phone volumes. The company's cost cutting program has generated savings of US$236 million in the third quarter and should lead to total savings of US$660 million for the whole year. These cuts should lead to the company achieving a 5% operating margin by next year, but this year, the company is on track to report its first full financial year loss in over 50 years.
In the infrastructure market, Ericsson reported GSM sales up 17% year to date, with a 6% decline in the third quarter. Total infrastructures sales decreased 8%, but are still up 3% year-to-date in a market that Ericsson expected to be flat this year. In the third quarter, orders were down 23%. The main decrease was in TDMA and PDC, but GSM orders also declined. The impact from 3G orders was lower than in the previous two quarters, as most agreements for the first phase of network deployments have already been booked. The company had expected the infrastructure market to be flat, or have slight growth for the full year, and it now expects a decline of up to 10% in orders compared to last year.
In the handsets division, sales were sequentially flat with unit volumes decreasing from 7.7 to 7.2 million which was partially offset by higher average selling prices. This resulted in somewhat improved financial performance compared to last quarter. The mobile phones activities retained by Ericsson following the set up of the joint venture with Sony, which include the licensing businesses for mobile technology platforms as well as the manufacturing in China is likely to see further cost reductions. The company still expects the global market to be for 400 million units this year, which is slightly higher than Nokia is claiming.
During the third quarter, the number of employees was reduced by 5,500, bringing the total reduction so far this year to 6,800 of the 10,000 planned for this year. Other measures such as outsourcing and divestitures have reduced the workforce further. In total, the number of employees has been reduced from 107,200 in March to 92,900 by the end of September 2001. With the transfer of 2,700 employees to Sony Ericsson Mobile Communications and other reductions during October, Ericsson's total headcount is now below 90,000
Ericsson's current Chairman, Lars Ramqvist will also be stepping down from his position next March to be replaced by Michael Treschow, who is currently the chief executive of Electrolux. Lars Ramqvist will still have a position at Ericsson, as he will be offered the job of Honorary Chairman of the Board, effective from next March. <<
- Eric - |
