Ericsson Rises as Fourth Quarter Looks Healthier
Updated from 9:20 a.m. EDT
Ericsson (ERICY) keeps on cutting, and for once investors are applauding.
The wireless infrastructure leader reported a wider-than-expected third-quarter loss Friday and projected that the wireless equipment market will contract in 2002. But the stock rose as investors took heart in the naming of a new chairman and cost-cutting progress.
For its third quarter, Ericsson missed Wall Street's earnings and revenue expectations by a substantial amount. The company lost 7 cents a share, against a targeted loss of 4 cents, and revenue amounted to $5.1 billion, far short of the $5.77 billion projection. Big-picture guidance wasn't much better: The ailing infrastructure power believes the market for equipment will contract by as much as 10% in 2002, reversing the moderate growth projection it made as recently as Sept. 4.But Ericsson did suggest that, like rival Nokia, it expects a solid fourth quarter. The company noted that it had positive cash flow of $112 million in the third quarter and predicted it would be cash-flow positive for the full year. That would require positive cash flow of $1.15 billion in the fourth quarter, a seasonally strong quarter in handsets. In the fourth quarter, Ericsson expects to deliver around $5.15 billion revenue, with a "somewhat smaller" loss than this quarter's 7 cents a share.
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Ericsson's steady new millennium slide
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