Ericsson Q2 net profit falls by 70%

Ericsson Q2 net profit falls by 70%

Ericsson announced its second quarter financial results, registering a dip in net profit by 70 percent over weak network segments, poor sales performance by its joint venture with Sony, Sony Ericsson and restructuring expenditure of about SEK1.8 billion in the quarter.

The company recorded a net profit of 1.90 billion Swedish kronor (SEK) (319.6 million USD) as compared to SEK 6.41 billion a year ago. The company''s sales too remained almost stagnant with a marginal 1.9% increase to reach SEK 48.53 billion from SEK47.62 billion beating analysts’estimation of SEK 47.51 billion.

Reporting a downfall it its operating profit which stood at SEK 2.89 billion as against SEK 9.26 billion in the corresponding period a year ago, the company’s gross margins also declined to 37 percent from 43 percent a year ago. The company attributed the decline in margin to shift in the business mix, which included a high proportion of new network buildouts. Further its network division witnessed 1% fall year-on-year over decline of US dollar.

Speaking further on the results, Chief Executive Officer of Ericsson, Carl-Henric Svanberg said “Sales have continued to pick up in the U.S., Western Europe has remained slow while we see good development in most high-growth markets. The continued decline of the U.S. dollar impacts sales growth and margins negatively also in this quarter.”

The company forecasts a flat development of the mobile infrastructure market in 2008 with professional services expected to post good growth