Wireless Vendors Continue to Struggle

Ericsson Faces Possible Downgrade of Debt to Junk
Ericsson's forecast that the mobile network equipment market will be worse than previously expected, down more than 15 percent, would make it extremely difficult for the company to become profitable in early 2003, and could cause rating services Moody's and Standard & Poor's to downgrade its debt to junk, analysts said. Currently Moody's has Ericsson's debt rated at one level above junk, and Standard & Poor's has it at two levels above junk status. A junk rating makes it difficult for companies to raise cash and attract conservative investors. (Source: Wall Street Journal) 

Cingular beats subscriber estimates, but loses income
Cingular Wireless yesterday said it signed up 353,000 net new subscribers in the second quarter, surpassing analysts' expectations of roughly 300,000. This beats the 234,000 subscribers it added in the first quarter, although it still lags the 701,000 customers it signed up a year ago. Cingular claimed 22.2 million subscribers as of the end of June. The carrier's operating income, however, fell to $722 million from $759 million a year ago. Operating cash flow, or earnings before interest, taxes, depreciation and amortization (EBITDA), fell 6 percent, to $1.18 billion from $1.25 billion a year earlier.

Sierra Wireless reports $39.1 million loss
Wireless modem maker Sierra Wireless yesterday reported a second quarter loss of $39.1 million, or roughly $2.40 a share. This is up from a $16 million loss reported a year ago. The results included a $36.1 million restructuring charge, about which the company warned last month. Sierra said it expects to post a third-quarter loss of between 2 and 4 cents per share, on revenue of $18 million to $19 million.

Qualcomm Earnings Beat Estimates
Qualcomm reported a net loss of $14 million or two cents a share for its fiscal third quarter, compared with a loss of $193.5 million, or 26 cents a share for the same period last year. The company's results were hurt by a $194 million charge associated with its investment in Leap Wireless. On a pro forma basis, which excludes charges related to the values of marketable securities, amortization of goodwill and losses related to strategic investments, Qualcomm reported a profit for the period of 24 cents a share for the period. Qualcomm said it was helped by worldwide sales of its CDMA2000 1X network technology, its BREW (Binary Runtime Environment for Wireless) software that enables application downloads to wireless devices, and its gpsOne location technology. (Source: Reuters, Wall Street Journal, CBS MarketWatch, AP) 

Samsung Electronics Reports Profit
South Korea's Samsung Electronics reported a 2Q net profit of $1.63 billion, more than double the amount reported for the same period last year. The company's 2Q02 sales were $8.45 billion, up from $6.82 billion a year ago, led by the semiconductor division. The telecommunications division, which includes cell phone sales, reported $2.35 billion in sales for the period, up 20% over a year ago. 

Lucent Contiues to Be in Red 
Lucent Technologies reported a $7.9 billion or $2.31 per share loss for its 3Q ending June 30. This compares with a $3.24 billion or 95 cents a share loss for the same period a year ago. The company also said it would cut 7,000 additional jobs by December 31. 

Leap Wireless Reports 2Q Loss
Leap Wireless reported a consolidated 2Q loss of $158.6 million, or $4.23 a share, compared with a loss of $128.5 million, or $3.91 a share for the year-ago period. The company said its results were affected by "the aggressive dealer incentives launched by traditional wireless carriers." Leap added about 65,000 customers during the period, bringing its subscriber base to 1.452 million.