Ericsson posts 12% profit increase in Q2

Ericsson's strong sales in Asia helped boost earnings 12% in the second quarter, but its shares dropped as the results missed expectations, an Associated Press report said.

The Associated Press report said the firm's net profit in the quarter came to 6.4 billion kronor ($960 million), up from 5.7 billion kronor ($859 million) in the same period last year but below the 6.64 billion kronor ($1 billion) forecast by analysts polled by Dow Jones Newswires.

Ericsson shares fell 5.11% to 26.38 kronor ($3.96) last week in Stockholm, the report said.

Sales rose 6 % to 47.6 billion kronor ($7.16 billion) from 44.8 billion kronor ($6.7 billion) in the second quarter of 2006.

While Ericsson's multimedia division sales grew 6% from a year ago, sales were down from the first quarter as a result of delays to several large revenue management projects, which hurt operating margins, the report added.

The Associated Press report quoted Redeye analyst Greger Johansson in Stockholm as saying the report was slightly weaker than expected.

'But this can mainly be explained by the multimedia area, a weak dollar and somewhat higher costs than expected,' Johansson said.

Revenue was up 32% in Asia, driven by expansions in China, India and Bangladesh, Ericsson said.

In June, the Stockholm-based company announced a $1 billion deal to help expand the network of China Mobile. Earlier this week, Ericsson said it had received a $2 billion network expansion contract from Bharti Airtel in India, the report said.

Sales grew 12% in Latin America, but fell 18% in North America. They were flat in Europe, the Middle East and Africa, Ericsson said.