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Ericsson beats forecasts
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January 28, 2000: 10:02 a.m. ET
Mobile phone giant posts 39% rise in Q4 pretax; sees more growth in 2000
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LONDON (CNNfn) - Swedish mobile-phone maker Ericsson on Friday reported a 39-percent jump in fourth-quarter pretax income, beating analysts' forecasts, amid strong growth in sales of network systems, and predicted sales would rise more than 20 percent this year.
The company also said it would split its stock 4-for-1 in May.
Pretax earnings rose to 8.48 billion Swedish crowns ($985 million) in the last quarter of 1999 from 6.11 billion crowns a year earlier, the world's third-largest cellular phone maker said. Sales rose 25 percent to 73.75 billion crowns.
In Stockholm, shares of Ericsson, which trails Finland's Nokia and U.S.-based Motorola (MOT: Research, Estimates) in the mobile-phone market, jumped 8.4 percent to 625 crowns on the news.
"The numbers are distinctly better than we were looking for," said Peter Knox, an analyst for Commerzbank, who rates the stock a buy. "The improvement in the infrastructure business is a sign that the restructuring is coming through."
"Order flow of 40 percent indicates the business is really strong and is, in fact, accelerating," added Knox. "Ericsson was getting left behind and is now playing catch-up. It looks like we're going to be raising our estimates."
Ericsson said mobile phone sales grew 33 percent in the quarter, helped by new models. For the whole of 1999, however, growth in sales was modest 3 percent, a result of the sluggish introduction of the new phones.
The company said sales in the first quarter of 2000 were likely to grow more than 30 percent from its "exceptionally weak" first quarter last year. Ericsson said its market share in mobile phones fell during the year, but added that the new product slate and soaring demand should help sales to rebound.
Also Friday, Ericsson tapped European, Middle East and Africa executive vice president Jan Wareby to head its consumer products unit, which includes mobile phones. Wareby replaces Johan Siberg, starting Feb. 15.
After taxes, net earnings for the quarter were 6.32 billion crowns, up 33 percent from 4.75 billion crowns a year ago. Sales rose 39 percent in Ericsson's largest market, the United States, which accounted for about 11 percent of total sales.
Pre-tax earnings for all of 1999 fell 10 percent to 16.39 billion crowns from 18.2 billion crowns in 1998. That beat a consensus forecast of 15.53 billion crowns among analysts surveyed by Reuters. Full-year sales rose 31 percent to 215.4 billion crowns. 
-- from staff and wire reports
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Ericsson
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