4G sales fuel Ericsson profit leap
Ericsson’s profits jumped 220% in 1Q11, as mobile broadband infrastructure outsold legacy 2G kit for the first time.
Profit of 4.1 billion kronor (€457 million) was driven by a 17% hike in revenues year-on-year to 53 billion kronor, which was mostly fuelled by 35% growth in network equipment sales to 33.2 billion kronor.
President Hans Vestberg told the Financial Times it was the first quarter where mobile broadband kit filled the void of falling 2G equipment sales. Demand was strongest in the US, India, Japan, South Korea and Russia, he noted.
The above-expectations results buoyed investor’s confidence in Ericsson’s ability to compete with fast-rising Chinese rivals Huawei and ZTE, boosting its share price 10%, the news paper states.
Beyond infrastructure, though, the first quarter was a mixed bag for Ericsson. Sales at its Global Services division fell 4% year-on-year to 17.4 billion kronor, due mostly to a 5% drop in sales of professional services to 12.6 billion kroner, while revenues from Multimedia services remained flat at 2.3 billion kronor, as strong sales of IPX and revenue management products were offset by lower TV solutions sales.
Joint ventures Sony Ericsson and ST-Ericsson are a cause for concern, with profit at the handset business down €10 million to €11 million year-on-year, and the components venture growing its operating loss to $178 million (€119 million) during the period.