Ericsson posts more losses

Ericsson posted a second-quarter net loss of $1.3 billion and warned investors that market conditions continued to be too uncertain to offer any detailed guidance for the rest of the year.

Ericsson executives continued to say that operator spending globally is considerably slower than last year, and they don’t expect to see any signs of recovery in 2001.

“Weak market conditions for our industry persisted in the second quarter,” said Ericsson CEO Kurt Hellstrom. “Many of our customers have delayed spending on network expansion and in some cases postponed contracted deliveries. We cannot predict how long this situation will prevail as we have yet to see signs of improvement.”

Losses in the company’s handset division were reduced to $432 million, compared with a loss of $535 million in the first quarter. Ericsson said its restructuring plan, which aims to cut $1.8 billion in annual operating expenses by next year, remains on track. The company said it cut 1300 employees in the quarter and 5,800 consultants. Another 2,000 employees will be cut in August. Ericsson said it expects savings of about $517 million from the program during the year.

Ericsson announced that operating cash flow turned positive for the quarter, primarily due to the sale of its Enterprise Systems unit, which contributed about $319 million.