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Ericsson-Sony Phone Startup Loses $132M in Q4

Stockholm, Sweden – Following the initial quarter of combined operations between Ericsson and Sony in the two companies’ newly formed wireless phone operation – Sony Ericsson Mobile Communications – wireless equipment maker Ericsson said the joint venture incurred a loss of $132 million in the three months.

The launch, which sold 6.8 million phones on sales of $909 milllion in the fourth quarter, is selling phones via a product strategy that primarily focuses on high-end models, resulting in lower volumes in the near-term, said Ericsson.

Ericsson reported worldwide sales of 390 million mobile phones in 2001, and expects this number to increase by 10 percent in 2002, to about 430 million units. The company said sales should be driven by increased availability of replacement phones with GPRS, Bluetooth, color screens and multi-media messaging.

Ericsson reported overall fourth-quarter sales of $5.6 billion, down 29 percent from the $7.7 billion recorded in the year-ago fourth quarter. The company revealed a net loss of $328 million in the fourth quarter, compared with income of $211 million in the same three months in 2000.

For the year, overall Ericsson sales dropped 15 percent, to $21.7 billion, down from $25.6 billion in 2000. Ericsson reported a loss of $2 billion for the 12 months, compared with income of $1.97 billion in the previous year.

The company also said it initiated over 22,000 layoffs in the last nine months.