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Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: Mika Kukkanen who wrote (3761)	10/22/1999 5:37:00 AM
From: elmatador	Read Replies (1) \| Respond to of 5390

Ericsson Profits Beat Expectations -------------------------------------------------------------------------------- REUTERS INDEX \| INTERNATIONAL \| BUSINESS \| TECHNOLOGY -------------------------------------------------------------------------------- Filed at 5:10 a.m. EDT By Reuters STOCKHOLM (Reuters) - Swedish telecoms group AB LM Ericsson reported a 35 percent drop in nine-month profits Friday, but the figures were better than expected and an upbeat outlook for 2000 triggered a big rally in the shares. Ericsson, world leader in mobile systems and third largest mobile phone maker, saw its shares soar 11.5 percent to a record 300 crowns after it said pre-tax profits fell to 7.91 billion crowns ($973.2 million), well above market forecasts of 7.35 billion crowns. Sales rose 13 percent to 141.6 billion. ``Ericsson anticipates a strong improvement in performance for year 2000,' the company said in its report. ``We're confident the positive trend that has started to emerge during the third quarter will continue into next year.' Although the company's shares later dropped back a little on the Stockholm stock market to stand 9.48 percent higher at 294.5 by ... GMT, the market cheered the company's report. It came one day after Finnish rival Nokia, the world leader in mobiles, posted a strong 59 percent surge in profits. Its shares were up 5.22 percent in Helsinki. Ericsson upgraded its forecast for 1999 sales growth to 12-15 percent from 10 percent and said it was possible to achieve a full year pre-tax profit of 15-16 billion crowns against 18.2 billion crowns a year ago. Ericsson, Sweden's largest company, has been under pressure in the past year following two profit warnings and an ailing mobile phone range. CEO Sven-Christer Nilsson was sacked because a restructuring program was too slow in turning around the company. ERICSSON RESTRUCTURING Analysts said Ericsson's share gained on the upbeat comments for the future and its restructuring program which is now expected to save 3.7 billion crowns a year in costs from 2001. Ericsson said its restructuring costs amounted to 1.5 billion crowns so far this year, of which 900 million crown came in the third quarter. Ericsson plans to shed 16,000 staff in 1999-2000. Nokia's share did not perform as well after its earnings report, which was marginally above market expectations, due to fears it will see increased competition in mobile phones next year. ``(Ericsson's) results were better than expected. They have an upbeat view on next year,' DLJ Technology analyst Douglas Smith told Reuters. ``Cost-cutting seems to have helped their profitability more than expected.' Ericsson and investors are looking forward to the launch of a new range of some 20 handheld devices, mostly mobile phones like the high-tech T28, to revive the company's fortunes from the fourth quarter onwards. ``The target is to regain a market share next year of 15 percent with at least 10 percent operating margins,' it said. 'Double-digit operating margins for the fourth quarter isolated are still possible...but more of a challenge to achieve.' The firm's Consumer Products division, largely made up of mobiles, posted a 415 million crown operating loss in the nine months against a profit of 3.32 million crowns last year. But a nine percent drop in consumer products sales to 29.8 billion crowns was largely offset by 40 percent growth in mobile system sales. Sales in its Netowrk Operators and Service Providers unit, largely made up of mobile systems, rose 23 percent to 99.21 billion crowns.