Feeds

Ericsson: recovery still far off

Energetic attack on costs

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

Ericsson has reported a Q2 net loss of $330 million.

Intensive cost cutting is all that kept telecoms giant Ericsson on its feet in Q2, when revenues fell by more than 28%. The most positive aspect to the company's results is its book-to-bill ratio, but a recovery in revenues still seems far off.

LM Ericsson Telefon's shares surged 18% on Friday due to better-than-expected second-quarter figures. However, the company's outlook remains poor and it was only vigorous cost-cutting that reduced the scale of
its losses in a market that shows few signs of recovery.

For the quarter to June 30, the net loss was flat at $329.9 million on revenue that fell 28.4% to $3.3 billion. At the mid-term stage the loss was $851.5 million, down from a loss of $689.8 million on revenue that fell 29.1% to $6.5 billion.

Carl-Henric Svanberg, who was brought in as CEO in February to turn around a company whose survival appeared in doubt, insisted that the company's financial crisis was behind it. "We are on steady ground. We are well on track to regain profitability," he said.

Ericsson has market leadership in mobile network infrastructure. The company believes that the mobile systems market could decline by more than 10% this
year, although it expects to maintain its market share.

Mobile network orders dropped 13% to $2.4 billion in the second quarter, while sales of fixed-line networks crumpled 42% to $205 million. Sales of professional services, Ericsson's big hope for the future, declined 14% to $556 million.

Overall sales for the third quarter are expected to be flat or slightly down sequentially, and a recovery in revenue is likely to be some time off. What is turning the company round is an energetic attack on costs: a workforce that stood at 107,200 in 2001 is now down to 57,600, and is due to reach 47,000 by 2004.

The one flicker of hope is that Ericsson's book-to-bill ratio has stayed above 1 for the second successive quarter, though orders at $3.4 billion
were 20% down on the same period last year.

Source: Computerwire/Datamonitor

Recommended research: Datamonitor: "Mobile Consumer Update; data data data" (DMTC0864)

© datamonitor logo

Datamonitor is offering Reg readers some of its technology research FOC. Check it out here.

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.