Ericsson beats Q3 estimates amid ongoing component shortage

Ericsson AB (ERIC) reported better-than-expected earnings for the third quarter, which lifted profits to $554 million, up 360% from a year ago.
Sales were basically flat, however, bringing the company’s year-over-year revenue down by 2.7% to $7.12 billion.
“Group sales in the quarter increased 2% year-over-year and was almost flat sequentially, negatively affected by a strong SEK,” President and CEO Hans Vestberg said. “Sales in the quarter for comparable units, adjusted for currency exchange rate effects and hedging, decreased -5% year-over-year.
A sore spot for Ericsson came on the multimedia side where it saw sales decline 31% year-over-year in that division. Additionally, industry-wide component shortages continue to impact the company’s bottom line. “The situation is gradually improving but it remains a challenge to fully meet the demand for mobile broadband,” the company reported.
“Mobile broadband continued to grow, especially in North America and Japan. In China, demand for 2G capacity returned during the quarter,” Vestberg added. “Across the world, operator focus is still on reducing operating expenditure and outsourcing of operations.”
Ericsson also reported a $68 million profit for the quarter on its Sony Ericsson mobile phone joint venture. Finally, the company estimated that mobile subscriptions jumped by 176 million during the quarter, bringing the worldwide total to 5.1 million. China and India accounted for almost half of that net growth, it added.