Ericsson back in black after three years of losses

6 Feb 2004

Swedish equipment manufacturer Ericsson today surprised the analyst community by reporting its first quarterly profit since March 2001 on the back of improved demand for its wireless infrastructure products. Although total revenues at the Stockholm-based company for the three months ended 31 December 2003 were virtually unchanged from the year earlier period at SEK36.23 billion, net income reached SEK142 million, a dramatic turnaround from the loss of SEK8.3 billion reported in the fourth quarter of 2002. Analysts had been expecting the company to report a loss of up to SEK1 billion.

For several months Ericsson and its counterparts in the telecoms equipment supply market have been suggesting that the global demand for infrastructure products might be showing signs of a recovery, whilst remaining cautious. Following this morning’s announcement Ericsson said that it expected first quarter 2004 sales to show ‘moderate’ growth from the corresponding period of 2003. It also said it would continue its cost-cutting programmes which have seen Ericsson slash its workforce from 105,000 at the end of 2000 to the current level of just over 50,000. Chief executive officer Carl-Henric Svanberg, who took the helm in April 2003, is aiming to reduce annual operating expenses to SEK33 billion by the third quarter of 2004, from a high of SEK88 billion in early 2001.

Sweden,

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