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Ericsson Sees 1st Losing Quarter in 9 Years

TECH BRIEFS

March 13, 2001|Bloomberg News

Ericsson, the largest maker of equipment for mobile-phone networks, will post its first quarterly loss in nine years as phone companies cut spending and handset sales drop. The Swedish company forecast a first-quarter pretax loss of $406 million to $508 million, with sales unchanged or somewhat lower than a year earlier. In January, Ericsson said it would break even and sales would rise 15%. Ericsson and rivals such as Motorola Inc. are suffering amid slackening mobile-phone sales, reduced spending on networks and a weaker U.S. economy. Ericsson, which is farming out phone production to stem losses at its handset unit, said cellular-phone sales will fall considerably this quarter.

Ericsson said it has frozen hiring at its wireless network unit and will seek to cut costs in other ways. The company's shares fell 21% in Sweden. Its American depositary receipts fell $2.09, or 25%, to close at $6.28 on Nasdaq. The company's market value has shrunk to $52 billion from a high a year ago of $183 billion.

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