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Ericsson Q1 Loss Narrows

Ericsson (ERIC) reported that its net loss attributable to stockholders of the parent company for the first-quarter narrowed to 837 million Swedish kronor or 0.25 kronor per share from the previous year's 10.07 billion kronor or 3.08 kronor per share. Operating loss also narrowed to 0.3 billion kronor from 11.3 billion kronor, supported by improved gross margin and reduced operating expenses, partly offset by lower sales.

Non-IFRS earnings per share were 0.11 kronor, compared to a loss per share of 2.19 kronor in the previous year.

Operating expenses decreased to 15.3 billion kronor from 18.9 billion kronor in the prior year. Write-down of assets as well as provisions and adjustments related to certain customer projects had a significant negative impact on the 2017 operating expenses.

Börje Ekholm, President and CEO said, "We have continued to execute on our focused business strategy creating solutions that help our customers improve their business. Our efforts to improve efficiency in service delivery and common costs are starting to pay off. The gross margin1) improved to 36% (19%) in the quarter, tracking well towards our Group target of 37-39% by 2020."

Net sales for the first-quarter decreased 9% to 43.41 billion kronor from 47.80 billion kronor last year. Sales, adjusted for currency, decreased by 2% year-over-year, with lower revenues in market areas North East Asia as well as in South East Asia, Oceania and India. The other market areas showed growth.

In the quarter the company reduced the total workforce by more than 3,000. Since the reduction activities were launched in July last year, the company has reduced the total workforce by almost 18,000. To date, the annual run-rate effect of cost savings is approximately 8.5 billion kronor compared with the target of 10 billion kronor for mid-2018. The run-rate reduction does not yet fully impact the quarterly results.

Looking ahead, the company expects the rapidly increasing focus on 5G to continue, with initial business discussions focusing on enhanced mobile broadband. We continue to work closely with customers to define the optimal business models to enable them to tap into new revenue streams and capture the full value of 5G.

The divestment of Media Solutions is expected to be closed by the end of the third-quarter of 2018. Results will be reported as share of earnings according to the equity method. Ericsson's holding will be 49% of the shares. Media Solutions sales were 3.2 billion kronor in 2017.

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