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Ericsson Q2 Phone Sales Decline 39%

7/20/2001 10:44:00 AM Eastern

Stockholm, Sweden - Significantly lower sales of mobile phones, amidst generally weak market conditions, hit hard at wireless equipment maker LM Ericsson during the second quarter.

Sales of phones declined 39 percent to $751 million, down from $1.24 billion in the year-ago three months. The adjusted operating loss for phones more than doubled to $426 million in the second quarter, compared with a loss of $195 million in the same period last year.

Ericsson said it sold 7.7 million phones in the second quarter, compared with 6.2 million in the same three months in 2000.

Overall net sales in North America dropped 27 percent in the second quarter, hitting $721 million, compared with $993 million in the year-ago period.

Ericsson reported overall sales of $5.8 billion in the second quarter, down 3 percent from the $6 billion recorded in the same three months in 2000. The company reported a net loss of $1.3 billion, down from a $946 million profit in the year-ago three months.

The company estimates industry mobile phone sales will be lower this year than expected. End users are expected to purchase some 400 million to 440 million units, compared with an initial estimate of 430 million to 480 million.

Because of increasing uncertainty, particularly in the U.S. and Western Europe markets, Ericsson is not offering specific financial guidance for the third quarter or full year.

For the six months, phone sales decreased 46 percent to $1.4 billion, down from $2.6 billion in the same period in 2000. The operating loss for phones increased to $964 million for the six months, up from a loss of $139 million in the year-ago six months.

Overall Ericsson sales for the six months dipped 4 percent to $11 billion, compared with $11.5 billion in the same six months in 2000. The overall net loss for the period was $1.28 billion, compared with a net gain of $1.33 billion the previous year.

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