Ericsson Surprises with 224% Profit Leap

Sales increased 39% in North America, 46% in Central Asia and northern Europe and 74% in China and North East Asia.

Ericsson, the world's largest mobile network equipment maker, posted a first-quarter net profit up more than threefold, beating expectations and sending its stock price soaring nearly 10%.

From January to March, the company recorded group net profits of 4.1 billion kronor, (US$675 million), a 224% rise from the 1.26 billion kronor it posted for the same period in 2010.

The company also posted a 17% increase in sales, or 25% not counting the exchange rate effects, largely "driven by continued strong demand for mobile broadband," said Hans Vestberg, CEO of Ericsson.

Sales increased 39% in North America and 46% in Central Asia and northern Europe. In China and North East Asia sales rose 74%.

"Sales in the first quarter were not impacted by the devastating earthquake and tsunami in Japan," Vestberg said. However, the company's supply chain of components had been partly dependent on Japan, which had caused some delays, he said. "We have taken a number of actions to mitigate the effects to secure that we limit the impact on our customers."

Ericsson's mobile phone joint venture with Japan's Sony meanwhile saw its first-quarter sales, reported earlier this month, fall 19% to 1.1 billion kronor and was "experiencing some disruptions in its supply chain from the earthquake in Japan."

And its other joint venture, wireless technology company ST-Ericsson, saw its sales plunge 27% during the quarter to 444 million kronor, which was a steeper drop than expected.

The decline was expected to continue in the second quarter, "due to the ongoing decline in legacy products," as ST-Ericsson continues its shift to new products, Ericsson said, adding it was "committed to financially support ST-Ericssons execution of their new portfolio."

At the end of March, Ericsson counted 91,546 employees and remained the market leader in mobile network equipment ahead of Nokia Siemens, Alcatel-Lucent and Huawei.

Copyright Agence France-Presse, 2011

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