Ericsson Joint Venture Mobile Biz Shows Q3 Loss

Stockholm, Sweden— High-end mobile phones continue to be the best selling models in the new Ericsson and Sony joint venture, Sony Ericsson Mobile Communications.

Sales in the combined operation for the third quarter hit $876.3 million. However, quarterly sales on unit volume of 5 million was not enough to generate a positive result, with Ericsson's 50 percent share of income before taxes coming in at a loss of $53.4 million.

The joint venture launched several new models targeting the mid- and entry-level segments, with sales starting to gain momentum late in the quarter, said Ericsson.

"Mobile communications is a long-term growth business," said Kurt Hellstrom, Ericsson president/CEO. "Over half a million new subscribers sign up each day and people are using their phones more and more. With only 17 percent worldwide penetration and mobile data just beginning, significant need for network expansion lies ahead," he said.

The industry outlook for phones continues to be uncertain for the near future, said Hellstrom. However, he said Ericsson is seeing consolidations, restructuring and a more favorable regulatory environment, which the company views as positive signs toward market stabilization.

Ericsson finds that the number of mobile subscribers continues to grow, with an estimated 45 million-plus added worldwide during the third quarter. At this rate, the company expects net subscriber additions this year to be toward the lower end of its 175 million to 215 million forecast.

Ericsson estimates that about 92 million mobile phones were shipped in the second quarter industrywide, and about 100 million in the third quarter. It previously had estimated 85 million units for the second quarter. Its full-year estimate is about 390 million units.

Overall Ericsson net sales dropped 29 percent in the third quarter, down to $3.6 billion, from $5 billion in the third quarter of 2001. Net loss hit $598.4 million for the third quarter, up from a net loss of $459.5 million in the same three months last year. The phones segment saw its adjusted operating loss hit $3.6 billion in the third quarter, down from a loss of $5 billion in the same quarter last year.

Overall Ericsson sales for the nine months dipped 28 percent, down to $11.6 billion, compared with $16.2 billion year over year. Net loss for the nine months was $1.4 billion, down from a net loss of $1.9 billion in the same period in 2001. The phones segment saw its net loss drop significantly in the nine months, down to $106.9 million, compared with a loss of $1.5 billion year-on-year.