Ericsson Reports on Q3

Net sales were SEK 28.0B, down 16% from last year's Q3, for a net loss of SEK 3.9B (SEK 0.25/share), down from a loss of SEK 5.0B (SEK 0.45/share)

October 30, 2003

3 Min Read

STOCKHOLM -- Third quarter summary

  • Net sales SEK 28.0 b. - book-to-bill above 1 for third consecutive quarter

  • Net income SEK -3.9 b. - adjusted income after financial items SEK 1.0 b.

  • Earnings per share SEK -0.25

  • Adjusted gross margin 35.9% - up 0.8%-points sequentially despite weakening USD

  • Operating expense run rate SEK 38 b. - down SEK 4 b. sequentially

  • Cash flow before financing SEK 9.1 b. - net of financial assets and liabilities SEK 20.5 b.

Book-to-bill was above one for the third consecutive quarter. Order bookings decreased sequentially by 1% to SEK 28.1 (20.5) b. Net sales in the third quarter grew 2% sequentially to SEK 28.0 (33.5) b. Currency exchange effects have had a negative impact on sales of 9% year-over-year.

Adjusted gross margin improved sequentially by 0.8 percentage points to 35.9% (32.6%) as a result of ongoing restructuring. Operating expense reductions are well on track, reaching an annualized run rate of SEK 38 (52) b. Adjusted income after financial items was SEK 1.0 (-3.6) b. compared to SEK -0.2 b. in the second quarter. Net currency exchange effects have had a negative impact of SEK 0.9 b. on operating income in the quarter.

Cash flow before financing was SEK 9.1 (-2.7) b. with major contributions from reductions in working capital and customer financing. The financial position was significantly strengthened with a net of financial assets and liabilities of SEK 20.5 b. Payment readiness remains high at SEK 71.4 (66.6) b.

CEO COMMENTS
"Ericsson is back to profit, which is an important milestone, but a lot still remains to be done before we reach good profitability," says Carl-Henric Svanberg, President and CEO of Ericsson. "The cost savings, as well as cash flow and gross margin improvements are the result of dedicated employees with a clear understanding of the need to be in control of our own destiny.

Our direction is clear. We are targeting an operating expenses run rate of SEK 33 b. by Q3 2004 and will continue to focus on cost and operational excellence. We must respond even quicker to customers' changing needs and leverage our technology and market leadership. This is the way to secure the profitability and cost advantages attainable by the market leader.

We are well positioned to capture new opportunities and are encouraged by our continued leading position in the market. We have gained a number of key contracts within the rapidly expanding markets for 3G/EDGE and MMS. Our solid 2G GSM position remains an important platform for further business expansion. We also see an increasing interest in our strong service offering where professional services have become a natural extension of our network contracts.

Leadership in this changing industry requires a clear understanding of operator and consumer needs in different markets. The ability to support operators in their launch of new services, changing business models and high quality standards in end-to-end solutions is crucial. A prerequisite is operational excellence in all aspects of our business," concludes Carl-Henric Svanberg.

LM Ericsson

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