Ericsson profits drop by 35%

By Malin Rising | May 1, 2009, Friday |

Print Edition

SWEDISH wireless equipment maker LM Ericsson yesterday reported a 35-percent fall in first-quarter net profit due to weak results from its handset unit Sony Ericsson and higher restructuring costs.

The company said net profit in the quarter was 1.7 billion kronor (US$210 million) compared with 2.6 billion kronor in the same period last year.

The world's leading maker ofmobile broadband infrastructure said sales increased by 12 percent to 49.6 billion kronor from 44.2 billion kronor.

"The effects of the global economic recession on the global mobile network market are so far limited," said Ericsson Chief Executive Carl-Henric Svanberg.

However, he said some operators are more cautious with longer-term investments in fixed networks, and some investments have been postponed in markets where local currencies have weakened.

Joint ventures

"It remains difficult to more precisely predict how operators will act in the current environment," he said.

Svanberg also said Ericsson's joint ventures, Sony Ericsson and wireless technology firm ST-Ericsson, are affected by the economic downturn and a sharp drop in consumer demand for handsets.

The company's share of earnings from the joint ventures fell to a loss of 2.2 billion kronor in the first quarter from a profit of 900 million kronor a year ago.

Restructuring charges related to Ericsson's cost-reduction scheme also weighed on the result by about 700 million kronor.

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Ericsson profits drop by 35%

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