This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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.

Long, Long Time Ago
Ericsson's steady new millennium slide

Ericsson clocked $4.03 billion in third-quarter systems sales, off sharply from the second quarter's $4.6 billion. The systems business turned a minuscule $18.7 million profit. Ericsson attributed the weakness to an industrywide spending freeze in Latin America and said GSM systems provided strength, led by its two strongest countries, China and the U.S.

Mobile phones continued their slide, with handset revenue falling to $693 million from last quarter's $745 million. The company predicts that 400 million handsets will be sold to worldwide end users in 2001, basically in line with forecasts by competitors Motorola and Nokia.

The company hopes to post a positive 5% operating margin for 2002. Ericsson firmly maintains that it has 40% market share among third-generation wireless system vendors, and the company expects to get 10% of its 2002 revenue from 3G equipment sales. "Nobody performs better than we do in mobile systems, in terms of sales and in terms of profitability," CEO Kurt Hellstrom said, countering recent claims by Nokia that it is seizing 3G market share from the market-leader.

The company also said it has trimmed its workforce to less than 90,000 workers, from 107,200 in March. Ericsson said it is ahead of its cost-savings schedule.

Ericsson also said it plans to name Michael Treschow chairman, replacing Lars Ramqvist. The company's stock, down more than 60% over the last year, added 31 cents to $4.66.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,903.61 +98.81 0.56%
S&P 500 2,070.35 -0.30 -0.01%
NASDAQ 4,772.4180 +7.0380 0.15%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs