Ericsson's first quarter sales and income will be lower than forecasted

Ericsson's first quarter sales and income will be lower than forecasted In our fourth quarter release, we expected sales for the first quarter to increase by around 15 percent over last year for comparable units, with continued strong growth for systems but lower sales for phones. Income before tax was expected to be around zero, due to continued losses in phones and increased 3G investments. In our outlook we emphasized the general economic uncertainties, and the development so far during 2001 has confirmed this picture. The current economic slow-down, in particular in the US, has increased the uncertainty about the growth rate in the entire information technology sector. As now announced by a number of important industry players, this uncertainty has had a great impact on current investment levels in the whole industry, also in some markets outside the US. This has also affected Ericsson. The slower growth is affecting all of our operations. Customers in the US in particular are postponing their capital expenditures. Also in Western Europe, in markets with already high penetration, operators are delaying investments. For mobile phones, the normal seasonality with low first-quarter sales is accentuated by low replacement demand, reduced operator subsidies, high inventory levels in the distribution chain and continued price pressure due to excess vendor capacity. We expect sales of phones to be considerably lower than first quarter last year. We now foresee total sales for the quarter to be flat or somewhat lower compared to first quarter last year, rather than the earlier expected net increase of 15 percent. As a consequence of lower sales than forecasted, continued investments in R&D, supply and implementation for 3G, and the price pressure on mobile phones, we now estimate income before tax to be in the range of -4 to -5 billion SEK. In addition to the ongoing comprehensive restructuring program in Consumer Products and a hiring freeze in our largest division Mobile Systems, we will rapidly review further measures to reduce costs and improve capital efficiency. In our First Quarter report on April 20, we plan to give our revised outlook for the second quarter and the full year in accordance with our guiding policy. The current economic uncertainty, however, makes it increasingly difficult to make forecasts with reasonable reliability. A conference call will be held today, starting at 4 p.m. CET. Call in numbers are: Europe: +44 8700 559 378, or +44 8700 559 393 North America: +1 888 754 3420 A replay of the conference call will be available on hour after the call until 6 a.m., Thursday March 15. Europe: +44 141 566 8866, or +44 800 027 0225, Client ID no: 551, passcode 136# North America: +1800 633 8284, or +1 858 812 6440, Reservation no 18274958 Ericsson is the leading communications supplier, combining innovation in mobility and Internet in creating the new era of mobile Internet. Ericsson provides total solutions covering everything from systems and applications to mobile phones and other communications tools. With more than 100,000 employees in 140 countries, Ericsson simplifies communications for customers all over the world. Read more at http://www.ericsson.com/press FOR FURTHER INFORMATION, PLEASE CONTACT Media: Roland Klein, Senior Vice President, Corporate Communications Phone: +44 7776 162997, E-mail: roland.klein@clo.ericsson.se Pia Gideon, Vice President, External Relations Phone: +46 8 719 2864, E-mail: pia.gideon@lme.ericsson.se Kathy Egan, Vice President, Communications, Ericsson Inc. Phone: +1 212 685 4030, E-mail: kathy.egan@ericsson.com Investor relations: Lars Jacobsson, Vice President, Financial Reporting & Analysis Phone: +46 8 719 0000, E-mail: lars.jacobsson@lme.ericsson.se Maria Bernström, Director, Investor Relations Phone: +46 8 719 0000, E-mail: maria.bernstrom@lme.ericsson.se Lotta Wiklund, Manager, Investor Relations Phone: +44 20 7451 5000, E-mail: lotta.wiklund@clo.ericsson.se