Strong Q4 Gives Boost to Ericsson's 1999 Results

STOCKHOLM (01/28/2000) - L.M. Ericsson Telephone Co. today said that its 1999 earnings results were boosted by healthy growth in the fourth fiscal quarter, which it said was the company's best ever with strong growth in mobile phone sales.

Ericsson also gave a bullish outlook for 2000, predicting at least a 20 percent increase in revenue and substantial earnings growth.

For the fourth quarter, Ericsson posted income before taxes of 8.5 billion kronor (US$980 million) on revenue of 73.8 billion kronor, up 39 percent and 25 percent, respectively, compared to the same period in 1998, Ericsson said in a statement presenting preliminary results for the quarter and full year ended Dec. 31, 1999.

Net income for the quarter, meanwhile, reached 6.3 billion kronor, up from 4.7 billion kronor in the same period a year ago. On a per share basis, income was up 29 percent to 3.10 kronor.

Sales of mobile phone handsets, a segment in which Ericsson in recent quarters has been losing money, rose 33 percent year-on-year during the fourth quarter, with an operating margin of 5.6 percent, Ericsson said in the statement. Fueled by increasing demand in the worldwide mobile phone market, meanwhile, sales of mobile network systems rose by over 40 percent.

For the full 1999 fiscal year, the telecommunications network equipment provider and mobile phone handset maker posted pretax profit of 16.4 billion kronor. Although that was 10 percent lower than the 18.2 billion kronor it posted for 1998, it still was higher than expected. Analysts had predicted pretax profit of around 15.6 billion kronor, according to published reports, while Ericsson itself earlier had predicted pretax profit of between 15 billion kronor and 16 billion kronor.

Revenue for the year was up 17 percent to 215.4 billion kronor, from 184.4 billion kronor in 1998.

Net income for 1999, meanwhile, reached 12.1 billion kronor, down 7 percent from just over 13 billion kronor for 1998, Earnings per share were also down 7 percent to 6.17 kronor (71 US cents), but still higher than the 67 cent consensus estimate from 23 analysts polled by First Call/Thomson Financial.

For the full year, sales of mobile communications equipment grew the fastest in North America at 36 percent. However, in China, Ericsson's second-largest market, sales were down 16 percent on the year.

Investors seemed heartened by the results and the rosy outlook Ericsson gave for 2000. In early trading on the Stockholm Stock Exchange today, Ericsson shares were up over 8 percent, trading at 624 kronor, as compared to yesterday's closing price of 577 kronor. A planned four-for-one share split, announced today, gave a further boost to the share price.

Ericsson, in Stockholm, can be reached via the Web at http://www.ericsson.com/.

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