Ericsson has narrowed its third-quarter net income loss
through its cost-cutting efforts and said the industry is heading
towards recovery with business development replacing financial
restructuring measures.
The manufacturer expected the mobile systems market in 2004 to
stabilise at 2003 levels, reiterating its forecast of a decline of
more than 10% on 2002.
Ericsson's net loss for the third quarter was £296m, compared
with a loss of £380m.
Revenue fell 16% to £2.1bn from £2.6bn in the same period last
year.
The company turned a profit of £80m, a marked improvement over
last year of £274m.
The company said its return to profitability was an important
milestone but that Ericsson would continue to focus on cost-cutting
measures and respond faster to customer demand.
Ericsson took restructuring charges of £411m in the quarter and
£943m for the year to date. Its total restructuring costs for 2003
are expected to be £1.2bn.
Job cuts have also continued within the company. Ericsson now
has 53,401 employees, 26% less than the same period last year.
Both orders and sales were flat compared with the second
quarter. Sales in Asia Pacific and Latin America increased
sequentially with major contributions from China, Japan and Mexico,
although those increases were offset by lower sales in Europe.
Ericsson said it has won a "number of key contracts" within the
3G and Edge (Enhanced Data Rates for GSM Evolution) markets as well
as with MMS services.
The company is also seeing growth in the number of WCDMA
(Wideband Code Division Multiple Access) subscriptions, reporting
1.7 million subscriptions by the end of the third quarter.
Ericsson's outlook on the handset business was upbeat as it sees
consumers responding positively to "applications with rich consumer
experience" such as sending and receiving pictures, downloading
music and accessing e-mail.
Sony Ericsson Mobile Communications earlier this month reported
improved operating results in the quarter with a net income of
€62m, up from a net loss of €93m in the third quarter 2002.
Laura Rhode writes for IDG News Service