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Investors cheer Ericsson’s profits

L.M. Ericsson, the world’s largest equipment supplier, posted a 17-percent increase in year-over-year third-quarter net profits thanks to its wildly successful handset joint venture, Sony Ericsson Mobile Communications L.P.

The mobile networks giant owns half of Sony Ericsson, which shipped nearly 20 million handsets during the quarter, a 43-percent year-over-year increase.

Ericsson’s quarterly net profit grew to $839 million from year-ago profits of $723 million.

Quarterly revenues rose 12 percent to $5.6 billion, boosted by Sony Ericsson’s $3.7 billion in sales.

Looking forward, Ericsson President and Chief Executive Officer Carl-Henric Svanberg said the company sees further momentum and focus on wireless broadband.

“For billions of people, mobile broadband will be the way to reach high-speed connectivity and access to the Internet,” Svanberg explained. “This will cause a significant increase in voice and data traffic in the world’s networks. Traffic in mobile networks is expected to quadruple in the next five years and there is even stronger growth expected in fixed broadband.

“The rollout of mobile broadband, HSPA, is happening all over the world, and we have announced eight new contracts during the quarter. We have a unique capability to combine leading mobile and fixed broadband solutions, meeting operators’ increasing demand for new consumer and enterprise applications.”

Sales at the company’s mobile division jumped 5 percent to $3.8 billion, while professional services sales spiked 31 percent to $1.1 billion.

The company also pointed out that it spent $395 million on restructuring efforts, mostly related to its integration of Marconi, which Ericsson purchased in 2005. Conversely, the sale of a defense unit brought in $422 million.

“With key contract wins, we have strengthened our market position further, and through continued focus on operational excellence, including already announced ongoing cost cutting activities, and the very strong performance by Sony Ericsson, our profitability shows a healthy development,” concluded Svanberg.

Ericsson’s earnings results set the bar high as its competitors get set to announce their own earnings in the coming weeks.

Traders pushed Ericsson’s stock price up $1.22 to $36.77 per share during trading after the news.


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