Ericsson warns of 20% drop in mobile sales
By Nicholas George in Stockholm
Published: October 18 2002 8:46 | Last Updated: October 18 2002 8:46
Ericsson, the world's largest supplier of telecom infrastructure, reported larger than expected third quarter losses and warned that sales of its mobile systems would fall by over 20 per cent this year.
Reporting a pre-tax lost adjusted for one off items of SKr3.9bn ($420m) in the three month to September 31, the Swedish company noted a sharp fall in orders for systems, down 49 per cent on a year earlier.
This was partly the result of SKr5.4bn worth of cancellations. Including restructuring charges the company made a net loss of Skr5.6bn during the quarter.
Ericsson's most traded B share fell 4.84 per cent in Stockholm to SKr4.73 following the announcement.
Kurt Hellström, chief executive, said the industry's near-term outlook remained uncertain with many operators pursuing a more gradual 3G roll out. However he said the company was on target with its own restructuring package. A return to profit is expected "sometime in 2003".
The company's tone was in marked contrast to that of Finland's Nokia, the world's number one mobile handset supplier, which on Thursday reported strong third quarter results even managing to make money in systems.
In Ericsson's much larger systems division, sales fell 29 per cent in the third quarter to SKr30.6bn with an operating loss of SKr1.3bn. The company said the lower order booking were primarily due to weak demand for TDMA and PDC systems combined with cancellations of 3G orders.
Three months ago the company indicated that its systems sales would decline by more than 15 per cent in line with the market. "However due to product mix, our Mobile Systems sales this year could decline more than our revised estimate of an overall decline of 20 per cent," it said.
In handset operations, where the company has pooled its resources in a joint venture with Sony of Japan, Ericsson made a loss of SKr500m. SonyEricsson's sales of SKr8.2bn, on unit volumes of 5m "were not sufficient to generate a positive result," Ericsson said.
Cash flow continued to be a weak with a negative cash flow of SKr2.7bn in the quarter. However the cash position was improved from SKr47.6bn to Skr74.4bn, primarily due to the rights issue in September. |
