Ericsson sinks deeper in the mire

Ericsson maintains that it is still on target to make a profit next year despite releasing disappointing Q3 figures today.

Sales were down by a third from SEK47bn (£324m) in Q3 2001 to SEK33.5bn (£231m) in Q3 2002. Worse still, a slump in demand for telco gear has also led to a sharp fall in orders to SEK20.5bn (£1.4bn) for Q3 2002 from SEK38.1bn (£2.63bn) in the same period last year.

The mobile phone company also made a worse-than-expected pre-tax loss of SEK3.9bn (£270m), down from 6.4bn (£440m) last year.

Despite this Kurt Hellström, President and CEO of Ericsson, chose to focus his attention on the potential of the mobile market place claiming that with only 17 per cent penetration, mobile communications is a "long-term growth business".

But he acknowledged that in the near-term at least, the industry outlook "continues to be uncertain".

"Many operators pursue more gradual 3G rollouts or target fewer markets," he said. "However, we are also seeing consolidations, restructurings and a more favourable regulatory environment, which we view as positive signs toward market stabilization."

And he also claimed that the restructuring currently being undertaken was delivering benefits. "We are driving efficiency throughout the organization to return to profit at some point next year," he said.

However, there are still tough times ahead and Ericsson estimates that it will see a market decline of around 20 per cent. In July Ericsson said it planned to axe a further 5,000 jobs as it struggles to cut costs amid tough trading conditions.

The job losses are on top of the 20,000 announced by Ericsson earlier this year. Ericsson said it expects to have fewer than 60,000 employees by the end of 2003. ®

Related Story

Ericsson axes 5,000 jobs