Ericsson Posts Quarterly Loss Of $296 Million, Issues Shares
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STOCKHOLM, Sweden -- Telefon AB LM Ericsson reported a second-quarter loss of 2.72 billion kronor ($296 million) on Friday and announced more cost-cutting measures, including job cuts.
The Stockholm-based company, which is the world's largest supplier of cellphone network equipment, also said it would issue around 8 billion new shares to raise 30 billion kronor in new financing.
The net loss for the three months ended June 30 compared with a loss of 14.2 billion kronor in the same period last year.
Ericsson said cost-cutting measures were having an effect, but it warned that demand for mobile-systems equipment this year will be even worse than it had anticipated. The company said it aims to cut by the end the third quarter of next year 10 billion kronor in costs in addition to the 20 billion kronor that it announced in April.
The goal is to reach a cost level where Ericsson can break even with annual sales of around 120 billion kronor, though the company said it still hopes to return to profitability sometime in 2003. "In light of our lowered market expectations for this year, we have intensified the cost reductions that we started last year and are substantially ahead of schedule," Chief Executive Kurt Hellstroem said.
He added that there is still a "lack of a visible turnaround point" for the telecommunications-equipment market.
Net sales for the second quarter were 38.5 billion kronor, compared with 62.7 billion kronor in the same period last year. The company also posted a first half-loss of 5.6 billion kronor compared with 13.8 billion kronor loss at the same time last year.
Ericsson spokeswoman Pia Gideon said Ericsson's work force has been reduced further from 82,000 to 76,000 and "can be below 60,000" in 2003. Ericsson's previous target was to cut its staff to around 65,000 by the end of 2003.
Announcing terms of its previously disclosed rights issue, Ericsson said the shares will be priced at 3.80 kronor (41 U.S. cents), a discount of nearly 75% to Thursday's closing price of 14.50 kronor in Stockholm. The company said the rights issue has been fully underwritten by a group of shareholders and banks. |
