Ericsson misses sales forecasts

Ericsson fell short of analyst’s expectations during 2Q, as a downturn in carrier spending on infrastructure resulted in lower sales during the period.
 
Net income of 1.88 billion kronor (€199 million) was double that of 2Q09, but fell short of the 3.12 billion kronor forecast by analysts polled by Bloomberg,as revenues fell 8% to 48 billion kronor.
 
Analysts predicted revenues would hit 50.8 billion for the quarter, Bloomberg reported.
 
The firm increased infrastructure sales in North America 128% to 13.1 billion kronor during 2Q, as operators invested in capacity upgrades to meet growing demand for mobile data services spurred by higher smartphone sales.
 
However, the market was Ericsson’s only growth region during the period, with sales in India and China suffering the most – down 63% to 1.4 billion kronor and 36% to 4.6 billion kronor respectively.
 
CEO Hans Vestberg said “mixed operator investment behavior,” contributed to a 12% fall in sales at the firm’s Networks business to 25.5 billion kronor in 2Q10, but noted that demand for mobile broadband equipment increased during the period.
 
 
Infrastructure sales were also hit by a global components shortage, which cost the firm between 3 billion and 4 billion kronor in sales during the quarter.
 
Despite the falls, the firm grew operating margins at the networks business 1% to 13% in 2Q, trouncing closest rival Nokia, which recorded a 5.9% loss during the period.
 
Semiconductor JV ST-Ericsson cut its losses from $213 million (€164 million) to $139 million despite an 18% fall in sales to $544 million year-on-year due to weaker than expected sales in Asia.
 
The division was also impacted by changes to its portfolio and supply-chain problems.
 
Global Services sales were flat on 2Q09, at 20.1 billion kronor.
 
The firm’s Sony Ericsson handset JV reported results last week, continuing the recovery started in 1Q with a profit of €12 million in 2Q09.

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