Ericsson sees bleak future for telecoms

Ericsson shares fell again on Wednesday morning after the firm warned the day before that it may be 2003 before the telecoms industry starts to recover.

Having already fallen 11.5 per cent on Tuesday to 45.1 Swedish kronor, shares dipped to 40 kronor by Wednesday lunchtime, before recovering to around 41.5 kronor by 15.30 BST. The fall left shares down eight per cent on the day and almost 20 per cent on the week.

Speaking at the firm's London strategy briefing, chief executive Kurt Hellstrom told attendees: "We would like to say we see positive signs, but we don't. No one can tell when we will see the end of the downturn."

He warned that the slowdown had intensified in Latin America but that there were some signs of a second half recovery in the US market, while strong growth continued in Japan and China.

But Ericsson, which has already said it will axe 22,000 jobs this year and merge its handset unit with Sony, confirmed that more jobs may be lost as cash flow remained a top priority.

Hellstrom said that, while the firm could not control the uncertainty in the market, it could control its costs.

In the longer term, the company remained optimistic for the prospects of third-generation services and said that GPRS would accelerate over this year and 2002.