Ericsson Posts Lower Net, Plans to Cut 5,000 Jobs

[OhioChick]

Source: Wall Street Journal

JANUARY 21, 2009, 7:24 A.M. ET

STOCKHOLM -- Shares in Sweden's Telefon AB LM Ericsson rose sharply Wednesday as the company reported better-than-expected fourth-quarter sales, but posted a 31% drop in net profit on restructuring costs and a lower contribution from Sony Ericsson.

It also said it would cut 5,000 jobs to lower costs and said the outlook for 2009 remains unpredictable.

By midday in Stockholm, Ericsson shares were trading up 12%, outperforming the broader Stockholm market.

The world's largest telecom-equipment maker, which had been due to release earnings Jan. 29, said net profit fell to 3.89 billion Swedish kronor ($460.8 million), in the three months to Dec. 31 from 5.64 billion kronor a year earlier. Analysts polled by Factset had forecast net profit of 5.75 billion kronor.

Sales in the period rose 23% to a forecast-beating 67.03 billion kronor from 54.46 billion kronor but operating income dropped to 6.21 billion kronor from 7.6 billion kronor. That was below expectations of 7.8 billion kronor, hit by a lower contribution from associated companies, including Sony Ericsson, its handset joint venture with Japan's Sony Corp. The operating margin fell slightly to 13.7% from 14%.



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