Ericsson forecasts flat mobile networks market in 2008 (Sweden)

Ericsson has given a cautious outlook for 2008, saying it expects a “flattish” mobile infrastructure market. The company reported fourth-quarter sales of SEK 54.5 billion, little changed from SEK 54.2 billion a year earlier. Operating profit fell to SEK 7.6 billion from SEK 12.2 billion a year ago, and net profit dropped to SEK 5.6 billion from SEK 9.7 billion. The Swedish company said it saw “significant margin erosion” in its networks business during the autumn. This was driven by a shift in sales mix favouring emerging markets with new network builds at lower margins, less spending on network upgrades and expansion in mature markets and the introduction of new technologies which also initially carry low margins. The company also witnessed a slowdown in the mobile market in the course of the year, with fourth-quarter sales affected by political unrest in certain areas. To meet the more difficult market conditions, Ericsson said it will intensify its focus on cost reductions this year. That includes plans to cut 1,000 jobs in Sweden, using voluntary redundancy as much a spossible. The main areas for cost reductions are SG&A, sourcing, supply and service delivery. Overall the company targets savings of SEK 4 billion by 2009, at a one-time cost of SEK 4 billion.

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