Ericsson, the world's largest supplier of mobile telephone networks, yesterday reported results well above expectations and forecast the market for its products could grow in 2004, after three years of decline.
The news pushed Ericsson's most-traded B share up 15 per cent in Stockholm to SKr19, as investors focused on the group's strong margins and positive outlook.
Mr Carl-Henric Svanberg, Ericsson chief executive, said the mobile infrastructure market "had definitely stabilised", as telecoms operators began to spend again on improving network quality and capacity.
In US dollar terms, the global mobile systems market could show "slight growth" this year, the Swedish company said. Previously it had forecast that the market would be in line with 2003.
Mr Svanberg's tone echoed that of other mobile equipment makers, such as Nokia, and added to the new mood of optimism that has enveloped the industry.
Ericsson's share price has risen 48 per cent since the beginning of the year. Sector colleagues such as Alcatel of France, and Lucent and Nortel Technologies in North America, have also made strong gains.
In the three months to December 31st, Ericsson made a net profit of SKr142 million (€15.6 million), its first quarterly net profit for 10 quarters.
Pre-tax profit adjusted for restructuring costs was SKr5.5 billion, compared with a loss of SKr2.1 billion in the same period a year earlier. Sales fell 1 per cent to SKr36.2 billion.
For the full year, the company made a net loss of SKr10.8 billion compared with a loss of SKr19 billion in 2003. Sales fell to SKr117.7 billion from SKr145.8 billion.
Adjusted gross margins reached 41.6 per cent, reflecting the enormous cost-cutting programme the company has pushed through in the past three years as it has tried to compensate for the collapse in demand.
Ericsson has reduced its workforce from 105,000 in 2001 to 51,600 at the end of 2003. About 4,600 jobs are expected to go this year.
However, Ericsson said it was monitoring whether sales growth was sustainable. Such trends could reflect the needs of telecoms operators to catch up on deferred investments.
