Sweden's Ericsson says Q4 profits dropped

Jan 25, 2012 By LOUISE NORDSTROM , Associated Press

(AP) -- LM Ericsson, the world-leading wireless equipment maker in terms of market share, on Wednesday shocked the market by posting a much worse-than-expected fourth-quarterly result, mainly blaming operators for turning cautious due to the global financial turmoil.

Shares in the company took a severe beating in the opening minutes of the Stockholm stock exchange, tumbling 13 percent to 8.95 kronor ($1.33).

The company, headquartered in Stockholm in Sweden, said profits in the final quarter of 2011 fell by more than two-thirds compared with a year earlier, reaching only 1.15 billion kronor ($170 million) from a previous 4.32 billion kronor. Aside from the woes on the , it also said operator investment spending had slowed down due to a period of high investment in capacity as well as caution linked to political unrest in some countries.

Although sales were more or less flat in the October-December period, rising by 1 percent to 63.67 billion kronor, the tighter budgets for operators led to a severe squeeze of its gross margin, which fell to 30.2 percent from a previous 34.7 percent.

Losses in its joint venture also hurt the results, it said. Ericsson last year sold its share in Sony Ericsson to Sony, but the deal is being finalized in this quarter.

For the full year 2011, however, a 12 percent rise in sales led to a of 12.19 billion kronor, also up 12 percent from the full year in 2010, the company said.

Greger Johansson, an analyst with research firm Redeye said the results fell way below expectations, describing them as "very weak," especially pointing to the disappointing sales figures in Ericsson's core unit, Networks.

"It's pretty much weaker on all areas," he said.

Ericsson CEO Hans Vestberg said that although his company expects operators "to continue to be cautious with spending, reflecting factors such as macro economic and political uncertainty" in the short term, "the industry fundamentals for longer-term positive development remain solid."

"With our global scale and presence, as well as technology and services leadership, we are well positioned to continue to drive and lead the industry development," he said.

Ericsson is the world leader in rolling out and upgrading mobile network infrastructure. Its biggest competitors are China's Huawei and Finnish-German joint venture Nokia Siemens.

Explore further: Alibaba steals Yahoo's thunder ahead of IPO

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Ericsson reports profit leap, shares slump

Jul 21, 2011

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.

Sony Ericsson profits down in 3rd quarter

Oct 14, 2011

Mobile phone maker Sony Ericsson posted a break-even third quarter Friday - blaming the drop in earnings on higher taxes and lower margins - and announced that it is shifting its entire portfolio to smartphones next year.

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.

Recommended for you

New US-Spanish firm says targets rich mobile ad market

4 hours ago

Spanish telecoms firm Telefonica and US investment giant Blackstone launched a mobile telephone advertising venture on Wednesday, challenging internet giants such as Google and Facebook in a multi-billion-dollar ...

Technip, Heerema win third giant Angolan oil contract

7 hours ago

The ultra-deep Angolan offshore oil project called Kaombo generated the third huge contract in three days on Wednesday when French group Total picked two firms to carry out underwater engineering worth $3.5 billion.

Yahoo sees signs of growth in 'core' (Update)

22 hours ago

Yahoo reported a stronger-than-expected first-quarter profit Tuesday, results hailed by chief executive Marissa Mayer as showing growth in the Web giant's "core" business.

User comments : 0

More news stories

Quantenna promises 10-gigabit Wi-Fi by next year

(Phys.org) —Quantenna Communications has announced that it has plans for releasing a chipset that will be capable of delivering 10Gbps WiFi to/from routers, bridges and computers by sometime next year. ...

Floating nuclear plants could ride out tsunamis

When an earthquake and tsunami struck the Fukushima Daiichi nuclear plant complex in 2011, neither the quake nor the inundation caused the ensuing contamination. Rather, it was the aftereffects—specifically, ...

Unlocking secrets of new solar material

(Phys.org) —A new solar material that has the same crystal structure as a mineral first found in the Ural Mountains in 1839 is shooting up the efficiency charts faster than almost anything researchers have ...

Patent talk: Google sharpens contact lens vision

(Phys.org) —A report from Patent Bolt brings us one step closer to what Google may have in mind in developing smart contact lenses. According to the discussion Google is interested in the concept of contact ...

How kids' brain structures grow as memory develops

Our ability to store memories improves during childhood, associated with structural changes in the hippocampus and its connections with prefrontal and parietal cortices. New research from UC Davis is exploring ...