Swedish mobile phone maker Ericsson has announced - as expected - a big net loss for the year 2001 but maintained positive cash flow and stuck to its earlier predictions for mobile telecom market conditions this year.
Reporting its annual results, Ericsson said it made a net loss of 21.3 billion kronor (€2.29 billion) for the year, compared to a net profit of about the same amount in 2000.
Fourth-quarter performance was mixed but the company's overall pre-tax loss of 30 billion kronor was in line with analysts' forecasts.
Ericsson noted that 2001 had been a year of sweeping restructuring that included trimming its work force from 107,300 employees in March to 85,200 by year's end and analyst's were unphased by the the company's widely-anticipated losses.
Ericsson beat the expectations of some analysts by reporting a cash flow of 16.5 billion kronor in the fourth quarter and positive cash flow of 4.2 billion kronor for the full year, a development it attributed to improvement in working capital excluding sale of test plants.
'We achieved our cost reduction targets in the efficiency programme and we will continue to improve profitability,' Ericsson chief executive Kurt Hellstroem said in a statement. 'We are now in a much stronger position to capitalise on market opportunities and restore profitability in 2002,' he said.
Ericsson had already reported losses for the first three quarters of last year and the company's overall annual results, despite being its first yearly loss ever, came as a surprise to no one.
Shares in the company rose yesterday after its chief rival, Finland's Nokia, reported its profits for 2001 and delivered a rosy forecast for a recovery of the battered telecom sector starting in the second half of this year.
The company said its new joint venture for manufacture of mobile telephones with Japanese consumer electronics giant Sony, launched last autumn, was off to a good start with 'substantially lower cost structure' and early production of advanced phones.
Ericsson noted sales of mobile phone units in 2001 reached around 390 million units, short of its 400 million-unit forecast, and predicted sales volume growth of around 10% this year that would be driven by increased availability of phones with more advanced capabilities than existing models.
The company also noted that in its third-quarter report last year it predicted sales of mobile systems - Ericsson's most profitable division - in 2002 would be flat or down 10%.
'We maintain this outlook for full year 2002 with an operating loss in the first quarter and results improving over the year,' the company said.
