Elcoteq lowers forecast

The reasons for the operating loss are low manufacturing volumes, price pressure in the Communications Networks business area and production challenges in Mexico. The one time costs arising from the earlier announced action plan to improve the company's cost-efficiency and competitiveness are estimated to be approximately 35 million euros of which approximately 30 million euros will be recognized in the first-quarter's result. Elcoteq has earlier estimated these one-time costs to be in the amount of 20 million euros. The increase in costs is due mainly to the write-down of Elcoteq's shares in Cellon International and some Cellon-related receivables. Cellon International is a wireless design and development house, in which Elcoteq has been a minority shareholder since the collaboration agreement made in 2003. Elcoteq estimates its net sales for 2007 to grow only slightly from the previous year. Operating income, excluding one-time items, is estimated to be on a break-even level. The estimate has been changed because of further intensifying competition especially in Europe.