Ericsson reports wide Q2 loss as sales slide

Telefonaktiebolaget LM Ericsson, the world's largest supplier of mobile-phone networks, posted a wide second-quarter net loss Friday as its carrier customers continue to delay or scale back investments in new infrastructure equipment.

Net loss for the second quarter was 2.7 billion kroner (US$336 million as of June 30, the end of the period being reported), or 0.17 krona per share, compared with a loss of 2.7 billion kroner, or 0.25 krona per share, in the same period the year before, the Stockholm, Sweden, manufacturer said Friday in a statement.

The pre-tax loss for the quarter, adjusted for one-off items, shrank to 200 million kroner from 3.1 billion kroner a year earlier.

Revenue fell 28 percent to 27.6 billion kronor, from 38.5 billion in the year-earlier period.

Third-quarter revenue will remain unchanged or fall "slightly" from the previous three months, the company said.

During the second quarter, newly appointed President and Chief Executive Officer Carl-Henric Svanberg reduced the number of employees by 3,300, bringing the workforce to 57,600 by the end of June. Ericsson said it will reduce its headcount to 52,000 by the end of this year and trim it further to 47,000 during 2004.

"We remain determined to return to profit during 2003," Svanberg said in the statement.

Ericsson said the global market for mobile phone networks could decline by more than 10 percent in dollar terms this year, compared with 2002.

In the handset business, the Swedish company also continued to lose money. On Tuesday, Sony Ericsson Mobile Communications AB, a 50-50 joint venture with Sony Corp., reported a net loss of €88 million ($101 million as of June 30, the end of the period being reported), compared to a loss of €83 million a year earlier, the company said in a statement.

Second-quarter sales increased 18 percent to €1.1 billion.

Sony Ericsson shipped 6.7 million phones in the quarter, a 34 percent increase from the year before, the company said.

Although Sony Ericsson expects to be profitable in the second half of 2003 as a result of continued strong growth in its GSM (Global System for Mobile Communications) and Japanese product portfolios, it warned that it would not be profitable for the full year due to restructuring costs and losses incurred in the first half.

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