Ericsson Posts Sharp Second Quarter Profit Decline

Ericsson Posts Sharp Second Quarter Profit Decline

Weak network sales and ST-Ericsson challenges blamed for a 63% drop.

Swedish telecommunications equipment maker Ericsson posted on Wednesday a sharp drop in its second-quarter profit owing in part to weaker network sales and challenges to its ST-Ericsson mobile platform unit.

Net profit dropped by 63% from the same period a year earlier to 1.205 billion kronor ($173 million), well below an average analyst forecast of 1.67 billion kronor compiled by Dow Jones Newswires.

Overall sales gained a slight 1.0% to 55.3 billion kronor, a statement said.

"Demand for global services and support solutions was strong, while networks sales decreased year-on-year mainly due to the expected decline in CDMA equipment sales as well as lower business activity in China," it quoted Ericsson president and chief executive Hans Vestberg as saying.

He referred to an older mobile telephone transmission technology that is giving way to newer ones.

Russian sales were also lower, Vestberg said.

In addition, "our joint venture ST-Ericsson is still in a challenging situation due to a significant drop in sales of new products to one of the largest customers and continued decline in legacy products," the Ericsson boss said.

ST-Ericsson, which is jointly owned by Ericsson and the Franco-Italian semi-conductor manufacturer STMicroelectronics, lost 318 million dollars in the second quarter an increase of 44% on the loss it posted a year ago.

Ericsson also reported billing delays that hurt its bottom line, but did not provide details.

Copyright Agence France-Presse, 2012

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