Wirless company posts large loss for second quarter; officials don't expect to see a profit before late 2003.
Swedish wireless equipment manufacturer LM Ericsson on Friday reported a large loss for the second quarter, and officials said not to expect a profit before late 2003.
The Stockholm company lost 2.72 billion kronor (U.S. $296 million) for the quarter, compared with a loss of 14.2 billion kronor in the same period last year.
The companys net sales were 38.5 billion kronor, compared with 62.7 billion kronor in the same quarter last year.
Orders booked for the companys systems business declined by 39 percent and sales 32 percent compared with the same period last year.
Results for Sony Ericsson--Ericssons joint handset venture with Sony Corp.--also were disappointing; the company reported a loss of .8 billion kronor, which officials attributed partly to product delays and high marketing costs.
"Although Sony Ericsson reports a loss for the quarter, we believe in the potential of this joint venture," said Ericsson CEO Kurt Hellstrom, in a statement.
Ericsson also announced it would issue roughly 8 billion new shares at a fire sale price of 3.8 kronor in an effort to raise 30 billion kronor. The price of shares at close of business in Stockholm on Thursday had been 14.5 kronor.
At the same time the company announced plans to cut 10 billion kronor in costs by the third quarter of 2003, in addition to the 20 billion kronor cost cut it had announced in April. This will largely be through employee layoffs, officials said.
"We continue to plan our operations to return to profit at some point in 2003," Hellstrom said. "With intensified cost reductions, a stronger balance sheet and a premier customer base, we are confident that we have the right strategy to restore profitability and reinforce our leadership in this long-term growth industry."
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