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Sweden's Ericsson Q3 profits soar

Source : AP
Last Updated: Sun, Oct 24, 2010 20:00 hrs

Swedish wireless equipment maker LM Ericsson AB on Friday said third-quarter net profits rose more than fourfold largely on the back of lower restructuring costs and an improved performance in its joint venture with Sony Corp.

The Stockholm-headquartered company reported a profit of 3.7 billion kronor ($557 million) in the quarter, way up on last year's equivalent of 810 million kronor. The jump was mainly attributed to lower restructuring charges as well as improved results in Sony Ericsson, which managed to turn a profit in the quarter.

Ericsson's key unit, Networks, did well too, with operating margins up from 14 percent to 17 percent.

Shares jumped 5.3 percent to 75.70 kronor ($11.39) in early Stockholm trading.

Ericsson revenues in the July-September period rose to 47.5 billion kronor, from 46.4 billion kronor in the year-ago quarter, coming in somewhat below expectations due to changes in exchange rates.

The company said it is still seeing the effects of a component shortage in the sector, but that it is gradually improving. To fully meet the demand for mobile broadband however, "remains a challenge," chief executive Hans Vestberg warned.

"While the supply chain bottlenecks have been resolved the industrywide component shortage remains," he said.

With more than 80,000 employees worldwide, Ericsson is one of Sweden's biggest companies and has long been a key global supplier of fixed and mobile phone networks.

On Thursday, the world's top mobile phone maker, Nokia, reported a third-quarter net profit of euro529 million ($733 million), in contrast to a net loss of euro559 million last year. It also announced it would lay off 1,800 people as it streamlines operations and restructures its lagging smart phone business.




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