Earnings Reports for Jan. 26

— --

Ericsson Plans to Exit Mobile Phone Production Business

Ericsson, the world's third-largestmobile phone maker, is getting out of the business of making phonehandsets so it can focus on its core business of developingwireless technology and network equipment.

Ericsson, which disclosed the plan today as it reported a 63percent plunge in fourth-quarter earnings, is selling its handsetfactories to an outside manufacturer, but will continue to sell itsown brand of phones produced by those plants.

The move out of handset production had been widely expected asEricsson has long suffered weakness in that business. Analysts saidthe move will strengthen the company's position as a leading forcein the industry's move toward advanced wireless technologies thatwill enable mobile devices to connect with the Internet.

"They also get rid of the parts that have brought the Ericssonshares downstream the past years," said Paer Johansson, seniorwireless executive with Noblestar, a Swedish consulting companythat works with Ericsson. "They can totally focus on the systemsside and developing applications as well as infrastructure and bythat be a more competitive technology supplier."

Ericsson said it had signed a deal under which Singapore-basedFlextronics International will take over its mobile phoneproduction facilities in Brazil, Malaysia, Sweden, Britain andparts of a U.S. plant in Virginia.

The deal with Flextronics, which will include the transfer of4,200 employees and the layoff of about 700 others, is to takeeffect April 1, subject to final agreements.

It also signed an agreement to have the Taiwanese electronicmanufacturer GVC handle some of its product development andproduction, complementing its partnership with Arima of Taiwan onentry-level phones.

Chief executive Kurt Hellstroem said the moves are designed tosave $1.6 billion in costs a year starting next year.

Ericsson's fourth-quarter net income dropped to $239 million, or 3 cents per share.

Its consumer product division's profit fell $1.6 billion.

The company blamed delivery problems and an inadequateentry-level product mix that hit sales and gross margins, as wellas an aggressive restructuring program for the phone operationsthat brought additional costs.

For the year, Ericsson earned $2.2 billion. Net sales rose 27percent to $29 billion.

Ericsson, which has more than 105,000 employees in 140countries, said it expected continued strong growth for systems andlower sales for phones.BACK TO TOP

Georgia-Pacific Reports Fourth-quarter Loss

Paper and tissue giantGeorgia-Pacific posted a fourth-quarter loss todayas a result of huge special charges for a mill closure and amajor acquisition as well as lower demand for its products.

The maker of Dixie Cups, Northern Quilted toilet paper andBrawny kitchen rolls reported a net loss of $187 million or 98cents per share, compared with income of $175 million or $1.00a share, a year earlier.

Even before the charges, the results fell far short of WallStreet's already lowered expectations.

The company said in a statement that it took after-taxcharges of $184 million, or 96 cents a share, primarily for awrite-down of the Georgia-Pacific Tissue assets, which is beingdivested, and the closure of a paper mill at Kalamazoo, Mich.

Excluding the charge, it said, it lost $3 million, or 2cents a share, for the quarter.

Georgia-Pacific Group, the manufacturing and distributionbusiness of Georgia-Pacific, said the results alsoinclude the impact of the $7.3 billion purchase of rival FortJames Corp. and related interest on acquisition debt thatreduced net income by $23 million, or 12 cents a share.

Last month, Georgia-Pacific, which also sells woodproducts, said fourth-quarter operating profits would fall"substantially" below Wall Street estimates, partly due to weakdemand and prices for building materials.

Before the shortfall warning, analysts polled by FirstCall/Thomson Financial had on average expected earnings of 58cents a share. Afterward, that was lowered to 32 cents.

Net sales for the quarter rose to $5.52 billion from $5.31billion.

"Despite our efforts to match production with demand duringthe fourth quarter, we were unable to overcome the effects ofthe slowing U.S. economy and higher energy costs as well asoverwhelming declines in building products prices," saidGeorgia-Pacific Chairman and Chief Executive A.D. "Pete"Correll.

"Late in the fourth quarter, we began to experience weakmarket conditions that could persist for the next severalmonths," he said. "Looking ahead, we expect market conditionsto remain depressed in nearly all our businesses with theexception of consumer products, which we believe will weatherthe current economic downturn."

Georgia-Pacific is a leading manufacturer of tissue, pulp,paper and building products and related chemicals. With annualsales of approximately $27 billion, the company employs morethan 85,000 people at 600 locations in North America andEurope.BACK TO TOP

Restructuring Shaves Gillette's Profits

Shaving products giant Gillette posted a lossof $85 million in the fourth quarter due to a restructuring charge,but its profit before onetime items beat Wall Street expectations.

The company lost 8 cents a share in the October-December perioddue to a restructuring charge of $430 million, or 41 cents a share,for previously disclosed plans to cut 2,700 jobs and to close somefactories.

It earned $339 million, or 32 cents per share, a year earlier.

But it said earnings before the onetime charge rose 3 percent to$345 million, or 33 cents per share, in the latest period. That wasslightly better than the 32 cents expected by analysts surveyed byFirst Call/Thomson Financial.

Sales rose to $2.82 billion for the quarter from $2.8 billion ayear earlier.

The company has a strong portfolio of brands, but has seenmostly disappointing earnings reports in recent years.

As part of its plan to boost profit growth, the company lastmonth announced a restructuring program, saying it planned toeliminate about 8 percent of its work force and close eightfactories and 13 distribution centers.

Earlier this week, the company announced that James M. Kiltswould take over as chairman and chief executive, replacing DeGraan,who had been serving as acting CEO. Kilts, who engineered adramatic turnaround at Nabisco, will be the fourth CEO in twoyears.

For the year, the company earned $392 million, or 37 cents pershare, compared with $1.3 billion, or $1.14 per share, in 1999.Sales rose to $9.3 billion from $9.15 billion in 1999.

Edward F. DeGraan, president and chief operating officer, saidthe company made progress in reducing working capital requirementsand "addressing our underperforming product lines."

The company makes and sells a wide range of products, but isknown most notably for its razors and toiletry products for bothmen and women. It also produces alkaline batteries, hair products,toothbrushes, and small household appliances.BACK TO TOP

Honeywell's Net Income Drops by 10 Percent

High-tech manufacturer Honeywell International reported today a 10 percent drop in fourth-quarter income before special charges, due to highermaterials and overhead costs and business decisions related to itspending merger with General Electric.