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Ericsson Q2 Loss Widens; Completes Cost Reduction Program

Ericsson (ERIC) reported that its second-quarter net loss widened to 1.8 billion Swedish kronor or 0.58 krona per share, from last year's net loss of 500 million kronor or 0.14 krona per share.

Adjusted loss per share was 0.09 krona, compared to adjusted earnings of 0.33 krona a year ago.

Net sales for the quarter declined 1 percent to 49.8 billion Swedish kronor from 50.3 billion kronor last year. Sales, adjusted for comparable units and currency, also declined 1 percent.

Ericsson said it has successfully completed the 10 billion kronor cost reduction program that was launched in the second quarter of 2017. The company has reduced the total workforce by more than 2,000 in the quarter and by 20,500 in total as part of the program.

The run-rate savings to date amounts to more than 10 billion kronor, and the company noted that the effect is gradually becoming visible in the earnings, mainly through lower service delivery costs and common costs.

Even though the cost reduction program is completed, the company maintained its forecast for restructuring charges of 5 billion to 7 billion kronor for the full year.

Ericsson said it continues to execute on its focused business strategy and is tracking well towards its 2020 target of an operating margin of at least 10 percent. The company noted that investments in technology leadership have resulted in increased gross margin to 37 percent as well as growth in segment Networks.

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