Ericsson Losses Shrink - on Target for Profitability

Ericsson has reported a second quarter loss of US$24.4 million, better than the average of US$330 million had been expected by industry analysts. The company expects to return to profit later this year. Carl-Henric Svanberg, President and CEO of Ericsson commented "We remain determined to return to profit during 2003. Over eight quarters we have more than halved our operating expenses and are approaching our earlier announced cost targets. I am impressed with how our employees are carrying out this dramatic downsizing in the middle of the ongoing launches of new technology. We are encouraged by a third quarter of positive cash flow and a strengthened financial position,"

Ericsson says that it expects the number of mobile subscribers continues to grow on pace to exceed 1.5 billion subscribers within three years. The company expect between 165 and 180 million net additions this year with approximately 44 million during the second quarter. In addition, traffic is expected to further grow as operators promote mobile internet and mobile multimedia services.

The company expects the market to remain weak in the near term. Operators continue to reduce debt maintaining a cautious view on capital expenditure, although Ericsson says it is encouraged by the quick improvement of their overall debt situation.

Sales for the third quarter are expected to be flat or slightly down on a sequential basis.

During the quarter, headcount was reduced by 3,300, bringing the workforce to 57,600 (76,200) by the end of June. Total number of employees will be reduced to approximately 52,000 by year-end and will reach 47,000 during 2004."

Posted to the site on 21st July 2003