Ericsson Jumps on Rosy Sales Forecast

Third-quarter earnings slip from year-ago levels, but the stock springs 12% higher on strong words from the mobile phone maker.
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reported Friday that net income fell 16% for the third quarter, but the world's third-largest cellular mobile phone maker said 1999 sales were improving and made a rosy forecast for the next five years.

Ericsson's American depositary receipts soared 4 3/16, or 12%, in midmorning trading to 38 11/16.

Net income for the Stockholm-based company's third quarter fell to 2.6 billion kronor ($321 million), or 1.33 kronor a share, from 3.1 billion ($380 million), or 1.59 kronor a share.

"Top line to bottom line, they hit the numbers, but overall there were some concerns," said Pete Peterson, a wireless communications analyst for

Volpe Brown Whelan

who has a neutral rating on the stock. His firm hasn't done underwriting for Ericsson. "What we're looking for from Ericsson is whether they can convert equity into the next generation

of technologies. That decision is still out."

Net sales for the first nine months rose 13%, and the company said it expects a full-year gain of 12%-15%, due to continued strong performances by its network operators and service providers, especially within its mobile system. Originally, Ericsson had forecast a 10% increase.

Ericsson also said it anticipates continued improvement in 2000, citing its improving mobile systems unit, positive contributions from recently acquired units, continued cost control, and a new mobile phone portfolio. The company said in a statement, "We are confident that the positive trend that has started to emerge during the third quarter will continue into next year."

Meanwhile, Ericsson predicted that worldwide mobile subscribers would increase to more than 1 billion by 2004, and that there would be more than 400 million mobile Internet users by 2005. "Ericsson is extremely well-positioned and should benefit substantially from the strong market development," the company said.