Ericsson declares first loss in 50 years

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The Independent Online

Ericsson, the telecoms equipment and handset maker, yesterday heaped yet more gloom on the sector by declaring its first annual loss in more than 50 years and stating that no sales growth is expected this year in its key mobile systems business.

Ericsson, the telecoms equipment and handset maker, yesterday heaped yet more gloom on the sector by declaring its first annual loss in more than 50 years and stating that no sales growth is expected this year in its key mobile systems business.

The Swedish giant lost 21.1bn Swedish kronor (£1.4bn) in 2001, compared with a profit of Skr14.3bn in the previous year. There will be no dividend. The mobile handset business was the biggest drag on the numbers, recording a Skr14.6bn loss for last year. This division was merged with Sony's handset interests in October.

Ericsson has suffered from slowing sales of mobile phone handsets and lower spending on infrastructure by cash-strapped telecoms carriers.

The final quarter of 2001, reported yesterday, saw a Skr5.1bn loss, an improvement from the Skr5.8bn loss in the third quarter, following restructuring.

More than 20,000 workers were sacked over the year to leave the workforce at 85,000. There has been controversy in Sweden over the fact that the company will still pay out bonuses to staff for last year, despite the poor performance. A spokeswoman for the company said these payouts were "modest" and would amount to no more than Skr200m for the whole company.

Sales dropped by 15 per cent to Skr58.5m in the last three months of 2001, compared with the same period in 2000, and revenues were down 5 per cent at Skr210.8bn for 2001 as a whole.

Looking forward, the chief executive, Kurt Hellstrom, said: "Market conditions are going to be rather grim in the first couple of quarters and afterwards we expect it to turn upwards."

Ericsson said sales in the first quarter of this year would be about Skr40bn, falling more than 31 per cent from the fourth quarter and significantly below analysts' expectations. It added that its loss for this quarter would be similar to the Skr4.9bn seen in the first quarter of 2001.

The number of mobile phones sold globally in 2001 was about 390 million, the company said, slightly below its forecasts, reflecting a slower-than-expected replacement rate. Ericsson said handsets would make a small loss in the first quarter of this year, but return to the black later in 2002. It expects global handset sales this year to be about 10 per cent higher than 2001, driven by increased availability of replacement phones with GPRS, Bluetooth, colour screens and multi-media messaging.

The slowdown in the telecoms equipment market continued during the fourth quarter, resulting in a more or less flat mobile systems market for the full year.

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