Ericsson reduces third-quarter loss

Ericsson, the world's largest supplier of mobile phone networks, narrowed its third-quarter net income loss through its cost...

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


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