Ericsson Chief Says Demand Remains Muted:
No Rebound Seen In 2002

Copyright 2002 National Post, All Rights Reserved
National Post (f/k/a The Financial Post)...03/28/2002
From LexisNexis

from BroadbandWeek Direct - March 28, 2002

STOCKHOLM - Ericsson AB, the world's largest phone equipment maker, said orders have not picked up this year as customers continue to slash spending.

Kurt Hellstroem, chief executive, said at the company's annual general meeting yesterday he is aiming for an operating margin of 5% in 2002.

But he reiterated 2002 sales are seen flat or falling 10% and he does not expect a "dramatic" rebound any time soon.

"We're still waiting for more orders. There are too few of those today," Mr. Hellstroem said. "We have not seen any change in the trend we had in last year's final quarter" when orders fell 39% from the year-earlier period.

Demand for Ericsson's products have slowed since Europe's phone companies spent about US$ 100-billion for new wireless permits and started slashing investments as they focus on cutting debt. Deutsche Telekom AG, Europe's largest phone company, has said it will trim investment in new networks by 10% in 2002 as it will miss its target to cut debt by 19%.

Some analysts and investors expect demand for mobile systems will pick up in the second half, as operators step up investments in equipment that speeds data transfer over wireless devices.

"We don't expect a dramatic rebound this year," said Mr. Hellstroem. "At the same time we want to be prepared" if demand picks up.

J.P. Morgan Chase & Co. analysts on March 13 cut their estimates for global spending on wireless networks this year and next, saying forecasts from operators were too high. Spending will drop 10% this year and 5% in 2003, they said.

Ericsson cut 22,000 jobs last year to adapt to slowing demand. That did not stop the company from reporting its first annual loss in more than half a century.