Ericsson reports profit leap, shares slump

Jul 21, 2011
The chief executive of Swedish telecom equipment maker Ericsson, Hans Vestberg, announced a 65 percent jump in second quarter net profit

Swedish telecom equipment maker Ericsson reported Thursday a 65 percent jump in second quarter net profit on strong sales but this still fell short of expectations and its shares slumped.

The group said that the strength of the krona and restructuring costs had held profits back to 3.12 billion kronor (342 million euros, $488 million). Analysts polled by Dow Jones Newswires had expected 3.92 billion kronor.

The cost of job cuts in Sweden, affecting 500 sales and administrative positions, had reduced the net figure by 1.3 billion kronor. The group revised upwards by half the cost of restructuring for the year from 2.0 billion kronor to 3.0 billion kronor.

The group employs 98,000 people, 10,500 more than 12 months ago, and leads its market, ahead of German-Finnish group , the French-US firm Alcatel-Lucent and the rising Chinese manufacturers Huawei and ZTE.

Ericsson said that its sales in the second quarter rose 14 percent from a year earlier to 54.77 billion kronor, in line with expectations.

Operating profit rose 41 percent.

Ericsson shares fell sharply in response, closing Thursday down nearly nine percent in an overall market down 0.50 percent.

Ericsson previously announced a strong improvement in the the first quarter of this year.

Existing are becoming saturated with traffic for and smartphones which use 10 times more capacity than conventional .

are turning to equipment providers to increase capacity.

Chief executive Hans Vestberg said that strong growth in recent quarters was continuing, notably in Brazil, China, Germany, South Korea, India and Russia.

But sales in North America, the company's biggest market with 22 percent of the total, fell by 6.0 percent, while western Europe and the Mediterranean region each dropped 2.0 percent.

Vestberg acknowledged that the overall outcome was mixed.

Excluding the effect of currency factors, sales rose 270 percent on a 12-month comparison but the rise of the krona reduced this to 14 percent.

Explore further: Court won't restore Oracle's $1.3B verdict vs. SAP

add to favorites email to friend print save as pdf

Related Stories

Sony Ericsson Q4 loss narrows 9 percent

Jan 22, 2010

(AP) -- Mobile phone maker Sony Ericsson on Friday said its loss in the fourth quarter narrowed 9 percent from a year ago to euro167 million ($235 million), as improved margins and lower costs offset a slump in sales.

Mobile phone maker Sony Ericsson posts Q1 profit

Apr 16, 2010

(AP) -- Mobile phone maker Sony Ericsson posted its first quarterly profit in nearly two years Friday, boosted by gains from high-end devices such as smartphones and cost cuts.

Mobile phone sales rise in 3rd quarter: study

Nov 12, 2009

Global sales of mobile phones reversed a slide that began late last year and turned positive in third quarter 2009, a trend expected to accelerate thanks to smartphones, a study disclosed Thursday.

Strong sales not leading to mobile profits

Jan 26, 2006

Mobile-phone manufacturers are finding that global demand for handsets is almost insatiable, as consumers in wealthy countries flock to update their phones with the latest multi-functioning products, while those in poorer ...

Recommended for you

Chinese e-commerce rivals challenge Alibaba (Update)

16 hours ago

China's biggest property developer, Wanda Group, and Internet giants Baidu and Tencent unveiled a new e-commerce venture Friday in a challenge to industry leader Alibaba Group ahead of its U.S. stock offering.

Nigeria launches national identity card scheme

Aug 28, 2014

Nigeria's President Goodluck Jonathan on Thursday launched a national electronic identity card scheme, which backers said would boost access to financial and government services in Africa's most populous nation.

User comments : 0