Ericsson flying high after modest gains

It’s all about context.
With investors apparently expecting dark news from the infrastructure sector, L.M. Ericsson’s stock shot up more than 12% today after the company reported a 5% gain in revenue, a 55% drop in net income and an erosion in gross margins.
Add an outlook that calls for a “flattish” network market this year and the soaring stock calls attention to itself. The slight gain in revenue exceeded analysts’ expectations, according to The Wall Street Journal. And, indeed, past quarters saw the company struggling with revenue.
Ericsson attributed the uptick in revenue to network demand in high-growth markets, particularly India, with demand in the United States “picking up,” while European demand is “slow.”
“We still find it prudent to plan for a flattish mobile infrastructure market,” said CEO Carl-Henric Svanberg. “The ongoing cost reductions as we adjust to such a scenario are running according to plan.”
The company’s professional services business grew, while its multimedia business lagged due to research investments and the company’s stake in Sony Ericsson Mobile Communications, where sales dropped 7% in the first quarter from the year-ago quarter.
Ericsson reported $7.4 billion in net sales for the quarter just ended (down 5% year-on-year), with net income of $435 million, down 55% from the year-ago quarter, a figure that included restructuring charges of $134 million. Gross margin dipped to 38.6%, down from 43% in the year-ago quarter.