L.M. Ericsson Telephone Co.'s chairman, Lars Ramqvist, will leave in March, the company announced Thursday, the same day it reported another quarterly loss and a grim financial outlook.
Ramqvist told Ericsson he will not be available for re-election as chairman at the shareholders' meeting in March. Ramqvist, who has been part of Ericsson's top ranks for 22 years, did not offer a reason for his departure.
Michael Treschow, who now heads Swedish white-goods maker Electrolux AB, will replace him, Ericsson said in a statement. The appointment is subject to approval by shareholders at the general meeting of shareholders in March.
In its quarterly financial report, Ericsson said the slowdown in the market for telecommunication systems, its main market, had worsened in the third quarter. It reported a net loss of 4 billion krona (US$375 million as of Sept. 30, the last day of the period being reported). In the same quarter last year, Ericsson booked a 4.4 billion krona net profit.
The loss is much slimmer than the second quarter when Ericsson, burdened by heavy restructuring charges, reported a 14.2 billion krona loss. Slowing business, particularly in Latin America, pushed sales down to 54.6 billion krona, a 19 percent drop from 67.3 billion krona in last year's third quarter, Ericsson said, noting that it still beat the competition with its mobile systems sales.
Mobile handset sales dropped slightly sequentially from 7.7 million units in the second quarter to 7.2 million units in the third. A higher selling price resulted in a somewhat improved financial result for the business, Ericsson said. Last year, the company reported it shipped 10.8 million mobile phones in the third quarter.
For the full year, Ericsson expects the number of mobile phones bought by users to be around 400 million, slightly above the 390 million forecast by rival Nokia Corp.
Ericsson will stop including mobile phones sales volumes in its financial reports beginning next quarter, in future reporting only earnings as a result of the spin-off of its mobile phone business into a joint venture with Sony.
An efficiency program to bring Ericsson back to profitability, announced in April, is bringing more savings than expected, Ericsson said. This year, the company will save about 7 billion krona, as opposed to the 5.5 billion krona previously planned, Ericsson said. The cost-cutting program involves 10,000 job cuts.
Difficult market conditions will persist well into next year, with the growth rate in 2002 expected to be no more than 10 percent, Ericsson said. Mobile operators are looking at the health of their own business before investing in network expansions, Ericsson said.