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Ericsson still sees market shrinking
Shares skid; fourth quarter largely hits forecasts
By Emily Church, CBS.MarketWatch.com
Last Update: 4:22 AM ET Feb. 3, 2003
LONDON (CBS.MW) - Ericsson shares dropped over 7 percent in Stockholm Monday after the Swedish telecommunications equipment maker warned it expects the market for mobile systems to further contract in 2003.
Ericsson (ERICY: news, chart, profile) on Monday said the mobile systems market "may decline by as much as 10 percent in 2003." The market declined about 20 percent in 2002 to an estimated $42 billion, it said.
The outlook for a declining market for the third year in a row was not unexpected, analysts said. Debt-laden carrier customers have been pulling back on spending on new equipment.
Ericsson posted a 2.2 billion Swedish krona loss for the fourth quarter before taxes that missed some of the forecasts. Sales and orders, however, largely met the analysts' targets. Orders and sales were down sharply over the year-ago period, but were higher vs. the third quarter, representing a "stabilization," the company said.
Still, net order intake, that is orders after cancellations, was SEK 31 billion, just above Ericsson's SEK 30 billion breakeven revenue target, noted Schroder Salomon Smith Barney.
Ericsson said its "overriding objective is to return to profit at some point in 2003 and improve cash flow."
It said its cost-cutting plans have led to a "significant reduction of operating expenses." The company, which posted a SEK 2.2 billion loss for the fourth quarter, pre-tax, also said "we will intensify our efforts to lower cost of sales to meet our gross margin target."
Ericsson in 2002 raised funds from shareholders and began a steep cost-cutting program that includes thousands of job cuts to bring costs in line with a then two-year decline in revenue.
"Ericsson's fourth quarter was comforting in terms of sales, order intake and financials. On the negative side, operating expenses were higher than expected, which fed through," said Swedish broker Enskilda.
Emily Church is London bureau chief of CBS.MarketWatch.com.
Gamco
Ericsson Can Reach Target If Sales Fall Short - CEO
Monday February 3, 4:21 am ET
STOCKHOLM -(Dow Jones)- Strengthened by its cost-cutting program, Telefon AB LM Ericsson can reach profitability even if its annual sales do not reach its break-even target of SEK120 billion, Chief Executive Kurt Hellstroem said at a press conference Monday.
The CEO said the company, which has lost more than SEK40 billion over the past two years, remains confident that it will return to profitability by the fourth quarter of 2003.
Hellstroem reiterated that Ericsson remains "totally committed" to its mobile- phone joint venture with Sony Corp. (SNE), which some analysts have speculated that it may abandon. Sony and Ericsson announced plans last week to inject EUR300 million into Sony Ericsson.
He said it expects Sony Ericsson to make a profit this year.
Hellstroem said weakness in the U.S. and China could lead to a decline in industry sales of wireless-network equipment this year.
The chief executive said industry sales for 2003 are likely to be at the lower end of the company's earlier forecast, which was for sales flat to 10% below 2002's level. The company estimated Monday that industry sales in 2002 were $42 billion.
Industry sales in the U.S. are likely to fall 10% to 20% this year, while sales in China are likely to decline again after a larger-than-anticipated fall in 2002, he said. The underlying growth potential in the Chinese market remains strong, he said.
Industry sales in Europe are likely to be flat to 4-5% higher, while sales in Latin America should recover after a weak 2002, he said.
Hellstroem said he was neither more pessimistic nor more optimistic about the market outlook than he was six months ago. But he said he had made a mistake by repeatedly insisting that operators could not possibly delay ramping up spending on their networks.
"This is something that I have had to eat many times," he said. "I regret saying they had to do it. Apparently they don't have to do it. They can just let the service deteriorate, and that is what is happening."
He said mobile networks in large cities such as London, New York and even Stockholm are dropping calls much more frequently than they should during busy hours.
Gamco
Ericsson Posts Wider-Than-Expected 4Q Loss
Monday February 3, 3:16 am ET
By Buster Kantrow
STOCKHOLM -- Telefon AB L.M. Ericsson reported a wider-than-expected loss for the fourth quarter Monday and appeared to dim its expectations for its core market, but said it still plans to become profitable sometime in 2003.
The Swedish company, the world's largest manufacturer of equipment used in mobile-telephone networks, said sales grew sharply in the fourth quarter from the third, although the increase was slightly less than the consensus market forecast.
The company warned the wireless-systems market could decline by up to 10% in 2003 after suggesting late last year that industry sales could be nearly in line with 2002. But it said its own operations were beginning to stabilize as the benefits of its cost-cutting program feed through.
For the quarter, Ericsson reported a net loss of 8.3 billion kronor ($966.1 million or 897.4 million euros) that included 6.3 billion kronor in restructuring costs. Last year, the company reported a net loss loss of 3.5 billion kronor.
On a pretax basis, and excluding restructuring costs, Ericsson posted a loss of 2.2 billion kronor, wider than the consensus forecast of 1.1 billion kronor in a Dow Jones survey. Last year, the company posted a pretax loss of 5.1 billion kronor, excluding a nonoperational capital gain of 200 million kronor.
Ericsson's core systems unit, which analysts expected to creep back into profitability in the quarter, posted an operating loss, excluding restructuring charges, of 300 million kronor ($34.9 million or 32.4 million euros). Excluding a risk provision, though, the unit was slightly profitable.
Sales fell 37% to 36.75 billion kronor from 58.54 billion kronor. Analysts had expected sales of 38.9 billion kronor.
Ericsson, whose sales fell 31% in 2002, has now lost more than 40 billion kronor since the start of 2001, amid a global slump in demand from wireless operators who have cut back capital spending in an effort to preserve cash.
The report was mixed, said Haakan Wranne, an analyst at Fischer Partners in Stockholm. The fourth-quarter numbers were generally slightly below expectations, but the positive result for the systems unit was encouraging, he said.
Net orders were up sharply from the third quarter, and the company said it was still on schedule to meet its cost-cutting targets, which include reducing its work force to below 60,000 by year-end from 107,000 at the start of 2001.
"It was a little bit weaker than we expected, but there were no big disasters, " said Urban Ekelund, an analyst at Redeye in Stockholm. "The order intake is still quite weak, but on the other hand, the savings program appears to be doing fine."
Ericsson itself struck a cautious tone. "While we believe that the worst of the market decline is behind us, the market remains unpredictable," chief executive Kurt Hellstroem said in a statement.
He said sales are likely to fall in the first quarter from the fourth quarter, following the traditional pattern.
Company Web site: http://www.ericsson.com
-By Buster Kantrow, Dow Jones Newswires; +46 8 54513091; buster.kantrow@dowjones.com
(Robb Stewart and Rod Stone in Stockholm contributed to this report.)
Gamco
Ericsson Reports Positive Cash Flow and Continued Progress in Cost Reductions
Monday February 3, 3:04 am ET
STOCKHOLM, Sweden--(BUSINESS WIRE)--Feb. 3, 2003--Ericsson(NASDAQ:ERICY - News):
-- Cash flow before financing SEK 1.6 b.
-- Adjusted income before taxes SEK -2.2 b.
-- Order intake SEK 33.0 b.(a)
-- GSM/WCDMA sales up 4% sequentially
Fourth quarter Twelve months
---------------------------------------
SEK b. 2002 2001 Change 2002 2001(2)Change
----------------------------------------------------------------------
Orders, net 30.7 39.9 -23% 128.4 201.8 -36%
- Systems 28.5 34.2 -17% 115.3 183.3 -37%
- Other operations 4.7 7.4 -37% 22.7 27.4 -17%
----------------------------------------------------------------------
Sales 36.7 58.5 -37% 145.8 210.8 -31%
- Systems 33.2 50.1 -34% 132.0 188.7 -30%
- Other operations 6.0 10.2 -41% 23.5 31.8 -26%
----------------------------------------------------------------------
Adjusted Operating Income(1) -2.3 -4.2 -12.5 -18.2
- Systems -0.3 0.4 -4.9 3.2
- Phones -0.3 -0.7 -1.3 -14.6
- Other operations -1.3 -3.2 -4.7 -5.1
- Unallocated -0.4 -0.7 -1.6 -1.7
----------------------------------------------------------------------
Adjusted Operating Margin(1) -6% -7% -9% -9%
- Systems -1% 1% -4% 2%
- Other operations -21% -32% -20% -16%
----------------------------------------------------------------------
Adjusted Income Before Taxes(1) -2.2 -5.1 -14.5 -21.1
Net Income -8.3 -3.5 -19.0 -21.3
Earnings per share, diluted
(SEK) -0.58 -0.31 -1.51 -1.94
Cash flow before financing
activities 1.6 19.9 -7.1 6.7
Number of employees 64,621 85,198
----------------------------------------------------------------------
(1) Adjusted for:
- Capital gain, Juniper - - - 5.5
- Non-operational capital
gains -0.3 0.2 - 0.3
- Restructuring costs,
net -6.3 - -12.0 -15.0
- Capitalization of
development expenses,
net 0.6 - 3.2 -
----------------------------------------------------------------------
(2) 2001 figures are restated for:
- Changed accounting principles in Sweden 2002 regarding
consolidation of companies with a controlling interest.
- Results from parts of Phones transferred to the joint venture
Sony Ericsson Mobile Communications, reported under Share in
earnings of JV and Associated Companies for the full year
2001.
(a) Gross order intake excluding cancellations
CEO COMMENTS
"Sales of GSM/WCDMA are up sequentially for the third quarter in a row and the order intake in Europe, Middle East and Africa (EMEA) improved significantly after a weak third quarter," says Kurt Hellstrom, President and CEO of Ericsson.
We improved Systems operating margins once again this quarter. Our position in GSM/WCDMA remains solid and we are encouraged by our progress in CDMA2000 with key wins in Asia and Latin America. Sony Ericsson's performance also improved in the quarter and the joint venture expects to start reporting profit during 2003.
The strategy to expand our Systems business through increased sales of professional services is proving successful. By capitalizing on our systems know-how we have taken an early lead in this growing market segment. The recurring nature of this business will make our revenue base more stable.
The sequential increase in sales and orders is more a factor of seasonality than an indication of a market recovery. However, with orders and sales at expected levels, good progress in our restructuring and positive cash flow, our fourth quarter results indicate that our business is beginning to stabilize.
Our overriding objective is to return to profit at some point in 2003 and improve cash flow. Our cost cutting is proceeding as planned with a significant reduction of operating expenses already evident. We will intensify our efforts to lower cost of sales to meet our gross margin target.
MARKET VIEW
There are now more than 1.1 billion mobile subscribers worldwide with approximately 51 million new subscribers added during the fourth quarter. For the full year we estimate about 190 million net subscriber additions, within our forecast of 175-215 million. We believe that the number of mobile subscribers remains on track to exceed 1.5 billion within three years with 165-180 million net additions anticipated in 2003.
In line with the industry consensus and our previous estimate, we believe that the mobile systems market declined about 20% to an estimated USD 42 b. during 2002. For 2003, we believe that the mobile systems market may decline by as much as 10%.
The telecommunications market correction is ongoing. We expect the historical correlation between operator capital expenditure (CAPEX) growth and revenue growth to eventually resume. However, the current level of lower CAPEX spending as a percentage of operator revenues will most likely remain.
An estimated 115 million mobile phones were sold through during the fourth quarter bringing the total for the year to approximately 395 million units. This compares with our full-year estimate of about 390 million units and approximately 390 million in 2001. We believe that the total units sold through during 2003 will be more than 430 million units.
The overall wireline systems market, which includes traditional circuit-switching, broadband access, optical transmission and multi-service networks, declined by over 30% during 2002 - in line with our estimate of a decline significantly more than 20%.
Complementing the infrastructure market, there is also a large and growing opportunity for providing services to network operators. Excluding network rollout services, which are embedded within the Systems market, the available market in 2003 for professional services is estimated to be more than USD 30 b. with a compound annual growth rate (CAGR) of more than 10%. Professional Services include systems integration, network operations outsourcing as well as a range of other advisory and operational support services.
COST REDUCTIONS AND OPERATIONAL REALIGNMENT
In the fourth quarter our operating expense annual run rate excluding restructuring costs was reduced to SEK 51 b. During the quarter we reduced our headcount by 7,100 employees, bringing our year-end headcount to 64,600. We remain on track to reach a SEK 38 b. run-rate for the fourth quarter 2003 and expect to be less than 60,000 employees by year-end.
Reduced excess capacity costs as well as improvements in processes and product design contributed to the stable gross margin level offsetting the negative effects of an unfavorable product mix.
During the quarter, restructuring charges were SEK 6.3 b. of which SEK 5.8 b. is related to redundancies. SEK 0.2 b. were related to the write-down of inventory and fixed assets as well as other costs for establishing more flexible operations. Of the SEK 28.6 b. planned restructuring costs SEK 5.5 b. remains. Cash outlays in 2003 are expected to be approximately SEK 10.8 b.
OPERATIONAL AND FINANCIAL REVIEW SYSTEMS
Order intake in the quarter improved sequentially to SEK 30.8 b., mainly due to seasonality. Compared to the fourth quarter last year, order intake declined by 10%. Cancellations of SEK 2.3 b. negatively affected orders booked. The Europe, Middle East and Africa (EMEA) region showed strong improvement compared to the previous quarter, while Latin America was down, partly due to order cancellations but also weaker demand.
Table: Systems order development
-0-
(SEK b.) Q1 Q2 Q3 Q4
-----------------------------------------------
2001 62.8 51.0 35.3 34.2
2002 39.8 33.7 23.3 30.8
Change -37% -34% -34% -10%
Cancellations 2002 -2.1 -2.5 -5.4 -2.3
2002 Net 37.7 31.2 17.9 28.5
Change -40% -39% -49% -17%
Sales in the quarter were SEK 33.2 b., up SEK 2.6 b. compared to the third quarter and down 34% compared to last year. Europe, Middle East and Africa (EMEA) and North America increased sequentially, while Latin America and Asia Pacific declined somewhat. The strongest parts of the Systems businesses were GSM, CDMA and professional services.
Adjusted operating income for Systems was SEK -0.3 (0.4) b.. Excluding risk provisions for customer financing of SEK 0.7 b. the result was SEK 0.4. b., compared to SEK 0.2 b. in the third quarter. Gross margin has kept up well and operating expenses have gradually been reduced through our restructuring activities.
As an extension of our System business, Global Services generated sales of SEK 9.5 b. in the quarter. Excluding products, which from 2003 are excluded from services, sales of professional services grew 29% sequentially to SEK 5.7 b. and now represent 17% of Systems sales.
Mobile Systems
Orders in the quarter for our GSM/WCDMA track increased 51% sequentially, mainly driven by the Europe, Middle East and Africa (EMEA) region. Sales of GSM/WCDMA grew 4% sequentially and declined only 14% for the full year, implying a sustained strong market position. Full year sales of WCDMA equipment and associated network rollout services represented 9% of Mobile Systems sales.
The sharp decline in TDMA and PDC systems continued and combined they now account for less than 10% of mobile systems sales.
Multi-Service Networks
Orders and sales in the quarter increased sequentially by 9% and 28% respectively, but declined compared to last year by 29% and 50%, primarily driven by continued weak demand for traditional circuit-switching equipment, although our ENGINE solution continues to develop favorably.
PHONES
Our 50% share of income from Sony Ericsson Mobile Communications is included in "Earnings from Joint Ventures and Associated Companies."
Sony Ericsson Mobile Communications (SEMC)
The joint venture increased its shipments by 42% to 7.1 million units during the quarter, mainly as a result of the expansion of their product portfolio. Our 50% share of income before taxes in the quarter was SEK -0.3 b., compared to SEK -0.5 b. in the third quarter and SEK -0.7 b. a year ago. As previously announced, Ericsson and Sony will each invest EUR 150 million into the joint venture during the first quarter of 2003.
OTHER OPERATIONS
After transferring a portion of our holdings in a Chinese subsidiary to Sony Ericsson Mobile Communications, the company has become an associated company. As a result, from this quarter phone operations in China are included in our results as share in earnings of Joint Ventures and Associated Companies.
Other Operations now include the following commercial businesses: Defense Systems, Network Technology, Enterprise Systems, the retained parts of Microelectronics as well as the investment areas of Mobile Platforms and Bluetooth.
Sales improved by 4% sequentially, driven by Defense Systems.
Compared to the third quarter, adjusted operating income in Other Operations was flat. Positive effects from the divestiture of parts of Microelectronics and profit from Defense Systems only partly offset losses in other units.
CONSOLIDATED ACCOUNTS
Income
Sales in the quarter were SEK 36.7 b., up 10% sequentially and down 37% compared to the fourth quarter of 2001.
Gross margin remained stable, with a reduction of cost of goods sold and excess capacity costs offsetting negative effects of an unfavorable product mix. The seasonally adjusted operating expense run rate was SEK 51 b. for the quarter excluding risk provisions of SEK 0.7 b. for customer financing. The run rate also excludes the effects of capitalization of development expenses since they currently affect comparability.
The capitalization of development costs was started in January 2002 to conform to changes in Swedish GAAP. As no such costs were reported in previous years, net capitalized amounts do not yet include a normal rate of depreciation of a capitalized base. Therefore, the positive net effect of this is deducted when reporting adjusted operating income and adjusted income before taxes.
Net capital losses were SEK 0.7 b. of which SEK 0.3 b. were related to restructuring, and SEK 0.3 b. related to write-downs and sales of shares. Share in earnings of associated companies was net zero, including the loss of SEK 0.3 b. in Sony Ericsson.
In the quarter, the net effect of changes in foreign currency exchange rates compared to rates one year ago was SEK -0.1 b. The net effect in the first, second and third quarters were SEK 0.4, 0.8 and 0.6 b., respectively and SEK 1.7 b. for the year.
Financial net improved by SEK 0.7 b., as a result of interest income on the proceeds from the rights offering in September 2002.
Adjusted income before taxes, excluding restructuring costs, non-operational capital gains and net effects of capitalization of development expenses, was SEK -2.2 b. in the quarter. Income before taxes in the previous quarters of 2002 adjusted in the same manner was SEK -5.3, -3.3 and -3.7 b., respectively and for the full year SEK -14.5 (-21.1) b..
Net income was negatively affected by SEK 2.5 b. as certain tax costs were recognized in the quarter. Of these, SEK 0.8 b., relate to foreign withholding taxes that were not deductible due to insufficient taxable income and SEK 1.4 b. due to rulings by Swedish tax authorities disallowing deductions of capital discounts on convertible debentures and other costs.
Full-year diluted earnings per share were SEK -1.51 (-1.94). Prior periods have been adjusted for the stock dividend element of the stock issue.
Balance sheet and financing
The equity ratio was 37%, about the same level as last quarter, despite the loss incurred during the fourth quarter. Total assets were reduced during the quarter by SEK 28.9 b., of which SEK 8.2 b. is related to cash. Repayments of loans, including the lease arrangement for test plant equipment from December 2001, amounted to SEK 10.0 b..
Net debt improved in the quarter from SEK -5.2 b. to SEK -5.6 b. with total cash continuing to exceed all interest bearing debts.
Lower purchase volumes and increased sales significantly reduced inventory during the quarter, with inventory turnover (ITO) improving to 5.1 turns from 4.3 last quarter.
Our days sales outstanding (DSO) improved sequentially from 103 days to 91 days. Even with the higher sales, we reduced accounts receivable by SEK 3.8 b. compared with the third quarter.
Customer financing risk exposure was reduced by SEK 3.1 b. in the quarter. As previously announced, the 2001 portfolio of customer credits was discontinued. The credits, including Mobilcom, were taken back on the balance sheet and an associated cash collateral released. Certain of these credits have subsequently been sold in the market and the Mobilcom credits are to be replaced with France Telecom convertible bonds.
Deferred tax assets at year-end were SEK 26.0 b., an increase of SEK 5.1 b. during 2002. Deferred tax assets are related to countries with long or indefinite periods of utilization.
Table: Customer financing risk exposure
-0-
Dec 31 Mar 31 Jun 30 Sep 30 Dec 31
(SEK b.) 2001 2002 2002 2002 2002
----------------------------------------------------------------------
On-balance-sheet credits 18.7 16.8 16.6 18.9 21.1
Off-balance-sheet credits 12.8 12.9 11.5 6.8 1.5
----------------------------------------
Total credits 31.5 29.1 28.1 25.7 22.6
Less third party risk coverage -4.7 -1.4 -0.3 -0.8 -0.8
----------------------------------------
Ericsson risk exposure 26.8 27.7 27.8 24.9 21.8
========================================
On-balance-sheet credits,
net book value 14.8 12.7 12.4 12.7 14.0
Off-balance-sheet credits
recorded as contingent
liabilities 10.6 10.1 9.1 5.1 1.3
Financing commitments 31.2 28.1 25.3 14.0 14.0
----------------------------------------------------------------------
Cash flow
Cash flow before financing activities was positive by SEK 1.6 b. The main contributing factors were reduced inventory and improved collection of receivables. The SEK -2.8 b. effect from customer financing was mitigated by the release of a cash collateral of SEK 1.2 b. for the 2001 Credit Portfolio.
With the discontinuance of pro forma reporting, capitalization of development expenses of SEK 0.8 b. are now reported among investing activities rather than as an item adjusting income.
Net income as well as items adjusting net income to cash was affected by the increased tax costs in the quarter.
Adjusted for exceptional items, cash flow was SEK 5.2 b. in the quarter. These items include the buyback of Mobilcom credits of SEK -4.1 b. and SEK 0.5 b. in proceeds from the divestiture of certain R&D operations.
OUTLOOK
In our last report we indicated that our fourth quarter Mobile Systems sales could decline more than the overall market due to our exposure to the sharply declining TDMA and PDC markets. For 2003, we believe that we will maintain our overall share of the mobile systems market with an increase in 3G sales partly offsetting lower sales of TDMA and PDC.
While we believe that the worst of the market decline is behind us, the market remains unpredictable. Normal seasonality will most likely prevail during the first quarter and sequential sales will consequently be down.
We are planning to return to profit at some point in 2003 by lowering our costs and adjusting to the prevailing market conditions.
PARENT COMPANY INFORMATION
The Parent Company business consists mainly of corporate management and holding company functions. It also includes activities performed on a commission basis by Ericsson Treasury Services AB and Ericsson Credit AB regarding internal banking and customer credit management. The Parent Company has branch- and representative offices in 16 (15) countries.
Net sales for the year amounted to SEK 2.0 (1.4) b. and income after financial items was SEK 2.3 (-6.4) b. Write-downs of investments in subsidiaries have affected income by SEK -3.8 (-19.0) b.
Major changes in the company's financial position for the year were:
Decreased current and long-term commercial and financial receivables from subsidiaries of SEK 35.5 b.
Increased short-term and long-term customer financing of SEK 6.2 b.
Increased investments in subsidiaries of SEK 6.1 b.
Short- and long-term internal borrowings decreased by SEK 37.2 b. Notes, bond loans and convertible debentures, including short-term portion, decreased by SEK 5.4 b. Stockholders' equity has increased by SEK 30.1 b. and cash and short-term cash investments have increased by SEK 10.3 b., mostly due to the rights issue in September 2002. At year-end, cash and short-term cash investments amounted to SEK 59.3 (49.0) b.
In accordance with the conditions of the Stock Purchase Plan for Ericsson employees, 1,893,195 shares from treasury stock were distributed during the fourth quarter to employees who left Ericsson. An additional 291,635 shares were sold during the fourth quarter, in order to cover social security costs related to the Stock Purchase Plan. The holding of treasury stock at December 31, 2002, was 154,360,278 Class B shares.
DIVIDEND PROPOSAL
The Board of directors will propose to the Annual General Meeting that no dividend is paid out for 2002.
ANNUAL REPORT
The annual report will be made available to shareholders at our head office at Telefonplan, Stockholm, two weeks prior to the Annual General Meeting.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting of shareholders will be held on Tuesday, April 8, 2003, in Stockholm Globe Arena.
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR 20, Interim reports.
We have changed accounting principles since our latest annual report.
The following Swedish GAAP recommendations are now implemented:
RR 1:00, Consolidated financial statements
RR 15, Intangible assets
RR 16, Provisions, contingent liabilities and contingent assets
RR 17, Impairment of assets
RR 19, Discontinuing operations
RR 21, Borrowing costs
RR 23, Related party disclosures
The only material effects of these new standards relate to RR1:00, regarding consolidation of controlled companies, and RR 15, regarding capitalization of development costs.
According to RR1:00 we have consolidated as subsidiaries certain finance companies previously accounted for under the equity method. We have restated previous year in our primary statements.
According to RR 15, starting from January 1, 2002 we have capitalized certain development costs. Stockholm, February 3, 2003
Kurt Hellstrom
President and CEO
Date for next report: April 28, 2003
Auditors' Report
We have reviewed the Fourth Quarter Report as of December 31, 2002, for Telefonaktiebolaget LM Ericsson (publ). We conducted our review in accordance with the recommendation issued by FAR. A review is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the Fourth Quarter Report does not comply with the requirements for interim reports in the Annual Accounts Act.
Stockholm, February 3, 2002
Carl-Eric Bohlin Olof Herolf Thomas Thiel Authorized Public Authorized Public Authorized Public Accountant Accountant Accountant PricewaterhouseCoopers AB PricewaterhouseCoopers AB
Safe Harbor Statement of Ericsson under the Private Securities Litigation Reform Act of 1995;
All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as "anticipates", "expects", "intends", "plans", "predicts", "believes", "seeks", "estimates", "may", "will", "should", "would", "potential", "continue", and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; and (xii) plans to launch new products and services.
In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) further reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.
A glossary of all technical terms is available at: http://www.ericsson.com/about and in the annual report.
To read the full report, please go to: www.ericsson.com/investors/12month02-en.pdf
--------------------------------------------------------------------------------
Contact:
Ericsson, New York
Investors: Glenn Sapadin, 212/843-8435
investor.relations@ericsson.com
Media: Kathy Egan, 212/685-4030
pressrelations@ericsson.com
--------------------------------------------------------------------------------
Source: Ericsson
Gamco
Ericsson 4th Quarter Pretax Loss Seen Narrower
Friday January 31, 5:16 am ET
Call Us In London: 44-20-7842-9464
1001 GMT (Dow Jones) STOCKHOLM--Ericsson seen reporting 4Q pre-tax loss, excluding restructuring charges, of SEK1.11B, against pro forma loss of SEK5.1B in 4Q '01, consensus of 8 analysts' estimates compiled by Dow Jones. Sales seen SEK38.90B, -34% from SEK58.54B in 4Q '01 but up 16% sequentially. Estimates, particularly sales, are up in recent days as reports from peers suggested improvement in 4Q was strong. Focus will be on order book, changes to outlook for systems in 03, whether cost-cutting returned system to profit in 4Q. Results due 0630 Mon.(LCK)
Gamco
Posted by: Eric
In reply to: None Date:1/3/2003 1:59:06 PM
Post #of 110
Infrastructure Forecast by SoundView
"Abstracted from a report by Peter Richardson & Matt Hoffman titled "3G Will Help Infrastructure Market, but Still Several Quarters Away" ..."
http://www.investorshub.com/boards/read_msg.asp?message_id=651491
(I can't seem to cut and paste this information and still retain the format provided by Eric)
Gamco
Siemens To Launch 4 Mobile Phones In Coming Wks - Source
Wednesday January 22, 9:47 am ET
BERLIN -(Dow Jones)- Siemens AG plans to launch a smart phone, its first Symbian-operated product, in the coming weeks as it tries to keep up the pressure on rivals in the hard-fought mobile phone market, an industry source told Dow Jones Newswires Wednesday.
The smart phone launch is part of Siemens' plans to launch four new handset models.
Siemens will launch two phones: one high-end and one low-end model at the GSM World conference in Cannes, France, next month.
An additional two models will be launched at the CeBIT technology fair in Hannover, Germany, in March.
Siemens plans to launch a so-called smart phone, which combines a mobile phone with personal computer functions.
The smart phone model will be equipped with a color screen, and will be the German phonemaker's first product to use the operating system of Symbian PLC , the source said.
The decision to opt for Symbian software is a blow to Microsoft Corp. (NasdaqNM:MSFT - News) , which is seeking inroads in the wireless market.
Siemens, which bought a 5% stake in Symbian last April, will phase out its Microsoft-operated SX45 personal digital assistant, jointly developed with Casio, the source added.
Siemens also plans to expand its successful 55 handset series, which includes the Munich-based company's latest mobile phone - the S55, which has multimedia messaging capabilities, a color screen, and the option of an attachable camera with a built-in flash.
Siemens is the world's fourth-largest mobile phone maker with a market share of 7.8%, according to market research firm Gartner Dataquest.
Chief Executive Heinrich von Pierer said recently that Siemens sold more than 9 million mobile phones in the fourth quarter, improving on last year's performance.
The German conglomerate has been criticized in the past for not being aggressive enough with the introduction of new models. It currently offers some 20 mobile phone models.
Company Web site: http://www.siemens.com
-By Chris Reiter, Dow Jones Newswires; +49 30 288 8410; chris.reiter@dowjones.com
Gamco
Find the Feature Answer:
People that I have on ignore can now not read messages that I post on public boards.
Gamco
Boxer Brief: Poor reaction to good news
Tuesday January 21, 4:43 pm Eastern Time
http://biz.yahoo.com/oo/030121/77300.html
Gamco
OT: MIGR
I would like to see someone begin a MIGR stock board on IHub. There are many that are more familiar with the company than I am and would be better positioned to begin that thread. There is some stockholder overlap between IDCC and MIGR so I thought there may be someone out there that would be inclined to take on that project. Thanks.
Gamco
IDCC currently has relationships described as “research partnerships” with two Universities: Virginia Polytechnic Institute and State University (since March 2002) and McGill University (since October 2001). Are these “research partnerships” expected to produce patents listing college professors as the inventor and assigned to ITC?
The following is an example of what I am describing. Note that VPI is located at Blacksburg, VA.
United States Patent 6,499,006
Rappaport , et al. December 24, 2002
--------------------------------------------------------------------------------
System for the three-dimensional display of wireless communication system performance
Abstract
A method for displaying the results of predicted wireless communication system performance as a three-dimensional region of fluctuating elevation and/or color within a three-dimensional computer drawing database consisting of one or more multi-level buildings, terrain, flora, and additional static and dynamic obstacles (e.g., automobiles, people, filing cabinets, etc.). The method combines computerized organization, database fusion, and site-specific performance prediction models. The method enables a design engineer to visualize the performance of any wireless communication system as a three-dimensional region of fluctuating elevation, color, or other aesthetic characteristics with fully selectable display parameters, overlaid with the three-dimensional site-specific computer model for which the performance prediction was carried out.
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Inventors: Rappaport; Theodore S. (Blacksburg, VA); Skidmore; Roger R (Blacksburg, VA)
Assignee: Wireless Valley Communications, Inc. (Austin, TX)
Appl. No.: 352678
Filed: July 14, 1999
Current U.S. Class: 703/20; 703/5
Intern'l Class: G06F 017/50
Field of Search: 703/5,18,20 455/33.1,67.1,33.4,56.1 345/133
Gamco
Loop -
You represent one of our most highly respected posters and I am certain there are many here that have a feeling of relief to see that you are back posting on Mr. Lurgio's IDCC Board (where ever it may, from time to time, call home).
Gamco
Regarding a Settlement –
In as much as Nokia and Samung have hitched their wagon to the IDCC / ERICY train, maybe Mr. Campagna wants written acknowledgements from both that all is in order before he signs the last page of any Ericy settlement. I would like to think that we are just waiting for Finnish and Korean translations to be delivered in executed form before any announcements are to be made.
Just a thought about an extremely cautious management that has been given much reason to error on the cautious side of any and all subject matters.
Gamco
From Ellismd's post #3328 -
Jim Frost, Jupiter FL: Hi Andy. Qualcomm has previously announced a signed MOU with a "top-5" GSM operator to do a commercial trial of GSM/1X. Would you hazzard a guess to who the operator might be?
Andy Seybold: Jim--no because I know the answer and am not permitted to share it.
I wonder if this would entail the technology that IDCC previously eluded to a year or so ago and further stated that in IDCC's opinion Qualcomm would need an updated license from IDCC to deploy this product. I am asking and not at all suggesting that this is indeed the case.
Gamco
teecee -
What does "money flow" numbers on IDCC look like since January 1st? I consider the month of December to be so tainted with tax related sales (for both gain and loss strategies) that I choose to ignore such statistics). TIA
Gamco
IDCC Boxer Brief -
http://biz.yahoo.com/oo/030114/77280.html
Gamco
France's Alcatel Issues Strong 4th-Quarter Outlook
Tuesday January 14, 6:15 am ET
By Greg Keller
PARIS -- Alcatel SA Tuesday surprised investors with unexpectedly strong fourth-quarter 2002 revenue and earnings forecasts, a performance some analysts said demonstrated the company's restructuring efforts are paying off.
ADVERTISEMENT
The French telecommunications equipment maker said it expects revenue growth in the fourth quarter of 2002 to be "in the high twenties percent" compared with the previous quarter, while its operating result for the same period should be " around breakeven."
Previously Alcatel had forecast a 20% sequential rise in fourth-quarter revenue and said it would only break even before taking into account exceptional items.
Fideuram Wargny analyst Jean-Pierre Geremy said "Alcatel has long been the best in the class among telecom equipment makers and these numbers confirm that."
Alcatel shares, which have gained 37% since Jan. 8, rose sharply on the forecast and were up 19% at 6.60 euros ($6.93) in late morning trading in Paris.
The expected revenue growth is the result of a stronger-than-expected seasonal pattern and sustained sales mainly in broadband equipment and mobile infrastructure, the company said.
"The growth is coming from a healthy increase in broadband equipment, with Wanadoo and T-Online numbers confirming the trend," said Julius Baer strategist Edmund Sching. "With costs under control and with no net debt, this is very good news," he added.
Dexia Securities telecom analyst Antoine de Montille called the trading update "the second sign of a rebound" in Alcatel shares, after the successful launch of a 630 million euro convertible bond issue last month.
De Montille, who has a "buy" rating on the stock, said he sees a possible 20% upside from current levels over the next six months for the shares despite the fact that he still expects revenue to fall in 2003 as telecom operators continue to cut back on spending to reign in debt.
"What they are doing in terms of restructuring is really huge," Mr. De Montille said, and it's this, rather than an upturn in its markets, that will fuel Alcatel's rebound.
Alcatel is in the process of a restructuring plan that aims to cut the workforce to 60,000 at the end of this year from 119,000 at the end of 2000.
Other analysts said they were withholding judgment on the 2003 earnings outlook until the company reports its 2002 financial results later this month.
"The outlook for 2003 is still uncertain but the progress in fourth quarter is encouraging," a London-based analyst said.
-Greg Keller, Dow Jones Newswires; +33 1 40 17 17 40; greg.kelle@dowjones.com
Gamco
United States Patent 6,507,600
Schilling January 14, 2003
--------------------------------------------------------------------------------
Frequency hopping code division multiple access system and method
Abstract
The present invention is a communication system and method having a base station for communication with multiple remote units. The system comprises a base station which utilizes a plurality of sets of frequencies for selectively communicating with remote units in a predefined coverage area. The coverage area is divided into N concentric regions, where each concentric region is assigned one of the plurality of frequency sets such that for any given concentric region a different frequency set is assigned than the frequency sets assigned to all other adjacent concentric regions. The base station includes a means for communicating data to a remote unit over the set of frequencies associated with the respective concentric region as the remote unit travels from one concentric region to another. The system also comprises at least one remote unit having means for communicating with the base station over the set of frequencies associated with the respective concentric region as the remote unit travels from one concentric region to another.
--------------------------------------------------------------------------------
Inventors: Schilling; Donald L. (Sands Point, NY)
Assignee: Interdigital Technology Corporation (Wilmington, DE)
Appl. No.: 057333
Filed: October 29, 2001
Current U.S. Class: 375/134; 455/446; 455/561
Intern'l Class: H04B 015/00; H04K 001/00; H04L 027/30
Field of Search: 375/134,132,133,137 455/446,561,450,452 370/328,329,343 342/358
--------------------------------------------------------------------------------
References Cited [Referenced By]
Gamco
United States Patent 6,507,745
Ozluturk , et al. January 14, 2003
--------------------------------------------------------------------------------
Apparatus for controlling initial power ramp-up in a CDMA system by using short codes
Abstract
An apparatus for controlling transmission power during the establishment of a channel in a CDMA communication system utilizes the transmission of a short code from a subscriber unit to a base station during initial power ramp-up. The short code is a sequence for detection by the base station which has a much shorter period than a conventional spreading code. The ramp-up starts from a power level that is lower than the required power level for detection by the base station. The subscriber unit quickly increases transmission power while repeatedly transmitting the short code until the signal is detected by the base station. Once the base station detects the short code, it sends an indication to the subscriber unit to cease increasing transmission power. The use of short codes limits power overshoot and interference to other subscriber units and permits the base station to quickly synchronize to the spreading code used by the subscriber unit.
--------------------------------------------------------------------------------
Inventors: Ozluturk; Fatih M. (Port Washington, NY); Lomp; Gary R. (Centerport, NY)
Assignee: InterDigital Technology Corporation (Wilmington, DE)
Appl. No.: 086325
Filed: March 1, 2002
Current U.S. Class: 455/522; 455/67.1; 455/69; 370/335
Intern'l Class: H04Q 007/20
Field of Search: 455/522,63,67.1,69,70,436,437,517 370/318,320,252,324,331,332,350
--------------------------------------------------------------------------------
Gamco
Warbil -
You stated, "What about this notion...
It couldn't be as simple as ERICY just holding out for a more reasonable royalty rate could it? We know there was a group WP5 trying to control the royalty costs for 2G. We also know there is a group established to try to control the royalty costs for 3G. ERICY and NOK were and are members of both groups. Do you suppose NOK is putting pressure on IDCC in the ERICY case to lower their royalty rate for 2G?"
It may be that the following subject matters are currently on the table:
1) a 2G royalty rate from IDCC for Ericy + Nok + Samsung
2) a 3G royalty rate from IDCC for Ericy + Nok + Samsung
OR
3) a buyout price for IDCC from Ericy + Nok + Samsung
At some royalty rate it would be cheaper for the powers that be to buy IDCC than to pay them a recurring royalty.
Gamco
First UMTS Order for Siemens in Asia - Mobile Radio Operator TCC Orders UMTS Infrastructure for Taiwan
Monday January 13, 6:06 am ET
Deliveries Start in This Quarter - Full Speed Ahead for UMTS Production
MUNICH, Germany--(BUSINESS WIRE)--Jan. 13, 2003--The Siemens Information and Communication Mobile Group (Siemens mobile) is starting 2003 with a new UMTS order - the first in Asia.
Mobile radio operator Taiwan Cellular Corporation (TCC) has commissioned Siemens mobile to supply and set up its UMTS network. Siemens mobile has been the sole GSM supplier for TCC for seven years. This successful partnership, founded on mutual trust, is now to be continued with the setting up of the UMTS network. Siemens mobile is already delivering the first components to TCC in the current quarter of 2003. They come from the Siemens UMTS factory in Durach (Germany), where production of third-generation (3G) mobile radio is in full swing.
For Siemens mobile the contract with TCC is the first UMTS order in Asia and is therefore of major significance. "Having established ourselves as one of the top 3 UTMS suppliers in Europe we were able to win orders in every major country in Europe, and now we have recorded our first UMTS success in the Asian market. We will continue to pursue our 3G strategy offensive for Asia," says Lothar Pauly, board member of the Siemens Information and Communication Mobile Group, underscoring the significance of concluding this most recent contract.
Siemens mobile is supplying TCC with the core and radio network, hardware and software components for location-based services, and is supporting the Taiwanese mobile radio operator in developing its GSM network. TCC is part of the Taiwan Telecom Group which has around eight million mobile radio customers and which, with a market share of some 33.5 percent, is the market leader in Taiwan. Taiwan is one of the most highly-developed mobile radio markets in Asia with a penetration rate of 100 percent. This means that there are mobile phone users who have several contracts.
With its first UMTS order in Asia Siemens mobile is establishing a further milestone in its 3G development. UTMS test networks are now in operation in 21 countries, with four in Asia in China, Taiwan, Malaysia and Singapore. Over the past year Siemens mobile has already started to deliver infrastructure components to customers for commercial networks: So far more than 6,000 base stations have been delivered worldwide. The lead production site is Durach in Germany, subsequently production will take place in further Siemens mobile factories in Italy, China and Brazil.
The Siemens Information and Communication Mobile Group (Siemens mobile) offers the complete range of mobile solutions including mobile devices, infrastructure and applications. Devices include mobile phones, wireless modules, mobile organizers and cordless phones as well as products for wireless home networks. The infrastructure portfolio includes GSM, GPRS and 3G mobile network technologies from base stations and switching systems to intelligent networks, e.g. for prepaid services. Mobile Applications cover end-to-end solutions for Messaging, Location Based Services or Mobile Payment. For fiscal 2002 (September 30), Siemens AG mobile recorded sales of EUR 11 billion and employed approximately 28,600 people worldwide.
You can access further information about Siemens mobile on the Internet at http://www.siemens-mobile.com A photograph accompanies this press release. You can access the photo on the Internet at URL: www.siemens.com/icm-picture/icm200301004
You can access press releases, photographs and further information on the internet at:
http://www.siemens-mobile.com/press
Any statements in this document that are not historical facts are forward-looking statements that involve risks and uncertainties; actual results may differ from the forward-looking statements. Siemens AG undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
--------------------------------------------------------------------------------
Contact:
Siemens AG, Munich
Information and Communication Mobile
Andrea Rohmeder
Tel.: +49-89 636-52740; Fax -53484
E-mail: andrea.rohmeder@mch.siemens.de
Gamco
OT: Great Weekend for the IDCC IHub Board!
Wonderful coverage on this Board this weekend! Education and excitement all at the same time! No need to name names. Everyone knows all of those that have put in the extra effort (above and beyond!) into this endeavor. And I thank them all!
Anyone that has followed this story stock now knows that there is a legitimate story to be told and that this board is the place to learn about it. It has been about three years since I have felt this much like a genius!
Does anyone have connections with a travel agency that can arrange for a group rate airfare to Huston! We don't have much time left to get those tickets. LOL
Gamco
Teecee -
Do you have any thoughts concerning IDCC's "money flow" so far in 2003? TIA
Gamco
redhot -
It was filed 12/7/2001
United States Patent 6,504,848
Chao January 7, 2003
--------------------------------------------------------------------------------
Binary-tree method and system for multiplexing scheduling
Abstract
A method for multiplexed scheduling of information blocks from multiple sources on a single communication channel divided into multiple address positions. The information block from each source has a repetition period and is divided into a number of segments. The method includes determining the total number of positions on the channel to be scheduled; mapping positions in a non-sequential order corresponding to nodes in a binary tree, whereby each layer of the binary tree corresponds to a repetition period; ordering the blocks by repetition period, starting with the smallest repetition period; assigning information segments of each block to unassigned positions, and marking as assigned all child nodes of the assigned position node in the layer corresponding to the repetition period.
--------------------------------------------------------------------------------
Inventors: Chao; Yi-Ju (Huntington Station, NY)
Assignee: InterDigital Communications Corporation (King of Prussia, PA)
Appl. No.: 010868
Filed: December 7, 2001
Current U.S. Class: 370/437; 370/537
Intern'l Class: H04J 003/16
Field of Search: 370/437,442,443,444,445,447,458,461,462,537,538,540
Gamco
OT: Loop -
As a suggestion, you may want to first try typing your posts in a word processing program (such as Microsoft's Word) and then just pasting them into Ihub. Either way, your quota of quality posts must not be deminished! LOL I always enjoy your thoughts.
Gamco
United States Patent 6,504,848
Chao January 7, 2003
--------------------------------------------------------------------------------
Binary-tree method and system for multiplexing scheduling
Abstract
A method for multiplexed scheduling of information blocks from multiple sources on a single communication channel divided into multiple address positions. The information block from each source has a repetition period and is divided into a number of segments. The method includes determining the total number of positions on the channel to be scheduled; mapping positions in a non-sequential order corresponding to nodes in a binary tree, whereby each layer of the binary tree corresponds to a repetition period; ordering the blocks by repetition period, starting with the smallest repetition period; assigning information segments of each block to unassigned positions, and marking as assigned all child nodes of the assigned position node in the layer corresponding to the repetition period.
--------------------------------------------------------------------------------
Inventors: Chao; Yi-Ju (Huntington Station, NY)
Assignee: InterDigital Communications Corporation (King of Prussia, PA)
Appl. No.: 010868
Filed: December 7, 2001
Current U.S. Class: 370/437; 370/537
Intern'l Class: H04J 003/16
Field of Search: 370/437,442,443,444,445,447,458,461,462,537,538,540
Gamco
Jim -
Click on your own profile. Do you have yourself on Ignore? There is a "Hide this Poster" button.
Gamco
spree99 -
You asked, "...how do u get rid of the long introduction on this site, thanks"
Just click the "Hide Board Onfo" button which is right beside the "Go To Post" box.
Gamco
dvm -
I am just finding my way around this site, but to answer your question, click on "Favorites" near the top of the screen and it will direct you to your last unread message if you have marked the IDCC Board on your favorites list.
Gamco
Loop -
Go to the "Favorites" tab near the top of the page. Board mark this IDCC Board. There are several features that are nice including the "message list".
Great to see you here!
Gamco
Fmilt -
I am just finding my way around this site, but to answer your question, click on "Favorites" near the top of the screen and it will direct you to your last unread message if you have marked the IDCC Board on your favorites list.
Happy New Year to ALL!!!!
Gamco
If Mr. Jim Lurgio likes this site, I will return!!!
P.S. - Only 25 Business Days until the ERICY vs. IDCC Great Debate!!!
Gamco