Ericsson chairman warns of lean months ahead

Only two months after talking up its prospects for 1999, Ericsson has admitted it is now worried about the year ahead.

In an interview last week with Swedish newspaper FinansTidningen, Ericsson chairman Lars Ramqvist said analysts' profits expectations - in large part based on Ericsson forecasts from earlier this year - are too high. He warned the coming year would be "tough".

In October, CEO Sven-Christer Nilsson said Ericsson would focus on IP (Internet Protocol) and wireless technologies, enabling growth of 20 per cent per year. The company's share price subsequently shot up by 20 per cent.

Nilsson said that in addition to being a top three supplier of wireline voice technology, the company would rank as one of the top three providers in the carrier class, real-time IP segment of the wireline data market. This is a market likely to be heavily contested by other major players, including Cisco Systems, Lucent Technologies and Nortel Networks.

Ericsson has blamed its slow down on poor sales in Asia and Latin America, and stagnant mobile phone sales. While Scandinavian rival Nokia has almost doubled its sales to become the world's largest mobile handset vendor - ahead of Motorola and Ericsson - the Swedish manufacturer has seen growth level off.

Ericsson stock had recovered slightly to 179.00SEK (Swedish kronor) by Monday lunchtime, but was still down about 5 per cent since chairman Ramqvist's comments.