Ericsson AB, the biggest maker of wireless networks, on Thursday posted a second-quarter loss, dragged down by its money-losing mobile-phone unit. The Swedish company lowered its outlook for the equipment market this year.
The pretax loss was 5.3 billion kronor (US$500 million), compared with a profit of 6.7 billion kronor in the year-earlier period. This year's number excludes a 15 billion-krona charge for 20,000 job cuts, while last year's number excludes gains from asset sales and a pension refund.
Ericsson, which is merging its phone business with that of Sony Corp, said making a profit from phones this year will be "challenging." Growth in its biggest market, cellular networks, will be "flat to moderate" this year as phone companies curb spending on equipment from Ericsson and rivals such as Nortel Networks Corp and Nokia Oyj.
"I'm in contact with a lot of operators and everyone is talking about investments, but nothing is happening," said Kurt Hellstroem, the chief executive, in an interview. "We haven't seen any improvement yet."
Ericsson shares advanced as much as 1.5 kronor, or 2.9 percent, to 52.5 and recently traded unchanged at 51 kronor.
The stock had fallen 53 percent this year as the company reported its first loss in nine years for the first quarter.
"Nothing to jump up and down about," said Susan Anthony, and analyst at Credit Lyonnais Securities in London. "There had been fears that the systems side would slip badly, so that's where the relief is."
In response to the slowdown in demand, Ericsson said it cut 10,000 jobs in the first half and will reduce another 10,000 in the second half. The Stockholm-based company said it's prepared to take more cost cuts if needed.
The company gave no new forecasts for the third quarter.
"Now uncertainty has increased even further, particularly in the US and Western Europe, regarding the duration and severity of the current unfavorable market environment," Ericsson said. "As a consequence, we refrain from specific guidance for the third quarter and the full year."
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