Ericsson AB, faced with sliding sales, mounting losses and dwindling cash, may have an even big-ger problem: Losing its position as the world's biggest seller of mobile networks to rival Nokia Oyj.
Ericsson has 29 percent of the market for cellular networks, compared with Nokia's 9 percent slice, according to Per Lindberg, an analyst at Dresdner Kleinwort Wasserstein. Both companies have said they want to grab the top position in supplying networks designed to let mobile phone users surf the Internet.
Nokia, aiming to capture 35 percent of that market, has won contracts by promising to lend debt-laden customers money to build wireless networks powerful enough to transmit video clips.
Ericsson, which is struggling to stem a mounting cash outflow, can't afford to be as generous, investors and analysts said.
``Nokia is taking market share in networks while Ericsson is cutting costs,'' said Patrick Nielsen, who oversees 1.5 billion euros (US$1.4 billion) in stocks as head of international equity at Mapfre Inversion, and owns Ericsson shares.
``Ericsson is losing its edge there now and people are asking how they can bounce back.''
Ericsson Friday posted its first quarterly loss from operations in nine years. The company said it may lose more money this quarter as phone companies, hit by falling prices and rising debts, delay network investments and cut subsidies on handsets.
What's worse, cash is pouring out of Ericsson at a daily rate of almost 200 million kronor US$20 million, according to Bloomberg calculations. Its cash pile shrank 41 percent in the first quarter to 20.9 billion kronor. Nokia ended the quarter with 47.9 billion kronor in cash and marketable securities -- 26 percent more than it had at the beginning of the year.
Now Nokia, which became No. 1 in handsets in 1998, is gunning for the top slot in the networks that link them too. Nokia saw sales of mobile networks rise 35 percent in the first quarter.
Ericsson's network sales rose only 9 percent.
And Espoo, Finland-based Nokia's operating profit from selling mobile networks was 18 percent of sales in the quarter, compared with 4 percent at Ericsson, indicating that Nokia's to back.'' Ericsson Friday posted its first quarterly loss from operations in nine years. The company said it may lose more money this quarter as phone companies, hit by falling prices and rising debts, delay network investments and cut subsidies on handsets.
What's worse, cash is pouring out of Ericsson at a daily rate of almost 200 million kronor (US$20 million), according to Bloomberg calculations. Its cash pile shrank 41 percent in the first quarter to 20.9 billion kronor. Nokia ended the quarter with 47.9 billion kronor in cash and marketable securities -- 26 percent more than it had at the beginning of the year.
Now Nokia, which became No. 1 in handsets in 1998, is gunning for the top slot in the networks that link them too. Nokia saw sales of mobile networks rise 35 percent in the first quarter.
Ericsson's network sales rose only 9 percent.
And Espoo, Finland-based Nokia's operating profit from selling mobile networks was 18 percent of sales in the quarter, compared with 4 percent at Ericsson, indicating that Nokia's to negotiate better prices and keep costs down, analysts said.
With Ericsson falling farther behind Nokia in mobile phones, Chief Executive Kurt Hellstroem said selling faster wireless networks is what will make his company profitable again. Ericsson currently sells less than 8 percent of the world's handsets while Nokia controls about a third of that market.
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