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Ericsson Posts Loss Amid Sales Slump

January 26, 2002|From Bloomberg News

Ericsson, the biggest phone-equipment maker, said Friday that it had a fourth-quarter loss because of its unprofitable handset venture and a slump in network sales.

The Stockholm phone giant stuck to a forecast of posting an operating profit in 2002.

Ericsson lost $330 million compared with a profit of $215.4 million a year earlier. The company took a pretax charge of $159.2 million for potential Latin American losses.

Sales at Ericsson and rivals such as Nortel Networks Corp. are plunging as phone companies around the world reduce network spending to preserve cash and pay back debt. Yet Ericsson expects last year's cost-cutting program, which included firing a fifth of its work force, to help it counter the slowdown this year.

"The first and second quarters will be tough," said Chief Executive Kurt Hellstroem, adding that the company will lose money this quarter. Operators "talk about making new investments, but they don't say when."

Ericsson said its first-quarter sales will fall about 32%, to about $3.7 billion. It forecast an operating loss in the first quarter.

Sweden's biggest company lost $2 billion in 2001, recording its first annual loss in more than half a century. That compares with a record profit of $1.96 billion in 2000. Analysts had expected a fourth-quarter loss of $292.2 million and a full-year loss of $1.95 billion.

Fourth-quarter sales fell 15%, to $5.5 billion, excluding the parts of the mobile-phone business transferred to a venture with Sony Corp. in October. Analysts expected sales of $5.1 billion. Ericsson generates about 15% of its total revenue in Latin America.

The loss from Ericsson's 50% share of the venture, called Sony Ericsson Mobile Communications Ltd., was $65.5 million. That's less than the $108 million expected by analysts.

*

In other technology earnings news:

*JDS Uniphase Corp., the biggest maker of parts used in fiber-optic equipment, said its fiscal second-quarter loss widened as sales fell 69%, the fourth straight decline. The company said it couldn't predict when sales will rebound. The loss widened to $2.13 billion, or $1.60 a share, in the quarter ended Dec. 29, from $895.4 million, or 93 cents, a year ago. Sales fell to $286.1 million from $925.1 million.

JDS said it isn't certain that third-quarter sales, expected to fall as much as 8.7% from the second period, will mark a low point. Orders for JDS components tumbled last year after demand for fiber-optic equipment fell and customers decided to use stockpiled parts.

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