Ericsson reports 22 percent growth in third-quarter earnings
STOCKHOLM, Sweden – Swedish telecom LM Ericsson said Friday its third-quarter earnings grew 22 percent as sales of wireless network equipment surged in North and South America.As mobile operators worldwide continued to upgrade and expand their networks, Ericsson’s sales were also strong in the Asia-Pacific region, but flat in Western Europe.Net profit rose to 5.31 billion kronor ($673 million) in the quarter, from 4.35 billion kronor a year earlier, but was slightly below analysts’ forecasts. Sales were up 14 percent to 36.2 billion kronor ($4.59 billion).Ericsson shares slipped 0.4 percent to close at 26.10 kronor ($3.31) in Stockholm trading.Ericsson, the world’s largest supplier of wireless network equipment, has continued to profit from a pickup in spending by its biggest customers. This month, Ericsson has unveiled orders worth around $290 million from two Chinese operators, as well as contracts from Movistar Argentina and Poland’s Polska Telefonia Cyfrowa.Latin American sales grew 40 percent with particularly strong results in Brazil and Mexico. In North America, sales were up 45 percent, boosted by deals to upgrade the networks of Cingular Wireless.”The market continues to show good development with growth in mobile voice and data, broadband and in emerging markets in general,” Chief Executive Carl-Henric Svanberg said.The Stockholm-based company reiterated its outlook for moderate growth in the wireless infrastructure market in 2005, and also predicted moderate growth for 2006.Telecom analyst Jan Dworsky in Stockholm said the report was in line with expectations, and noted Ericsson appeared to be widening the gap with its closest rival in network equipment, Nokia Corp. The Finnish company, whose main business is mobile phones, predicted its network sales would shrink in the fourth quarter.”I think that it’s positive that (Ericsson) is confident enough to give a moderate growth forecast for next year,” Dworsky said. “You did not get that feeling from Nokia.”However, Ericsson’s closely watched gross margin dropped to 45.2 percent, from 47.1 percent a year earlier, as sales of services, which have lower margins, grew faster than other sales.