Ericsson: More gloom possible

Hellstrom hopes for profits in 2003

STOCKHOLM, Sweden -- Ericsson, the world's largest mobile phone equipment maker, has warned demand may not improve next year.

Chief Executive Kurt Hellstrom told the Financial Times: "We don't think the market has become worse, but the downturn has been prolonged. We have to face the possibility that next year doesn't turn upwards,"

Hellstrom's comments come a day before shareholders vote to approve a $3.1-billion share sale to help the company through the industry's downturn as many operators freeze orders and concentrate on cutting costs and debt reduction.

Ericsson, which has slashed 42,000 jobs and joined forces with Japan's Sony to make mobile phones, made its first annual loss in 2001 and has said it would not return to the black until sometime in 2003.

The company's stock hit their lowest level since September 1996 on Tuesday, down 4 percent to 20.80 Swedish crowns after a profit warning from Singapore's Flextronics, which makes SonyEricsso's handsets.

MORE STORIES • Ericsson posts hefty loss  • Nokia warns of slower growth  • Ericsson to slash 20,000 jobs

The stock is down more than 90 percent from their peak of 230 crowns in March 2000.

Hellstrom reiterated that the company was not raising money to cover any "black holes" in its balance sheet, but would position itself for any recovery.

Shareholders are expected to vote in favour of the rights issue – the sale of stock to existing shareholders.