Ericsson Q4 sales up 23%, profits down 31%

Ericsson announced sales rose 23% in Q4 reaching SKr67bn (€6.135 billion) beating market expectations of SKr57bn. However, the quarter's net profit fell  by31%, as a result of lower gross margin and restructuring costs.

As part of a SKr10bn ($1.2bn, €920m) cost cutting initiative, it is to axe another 5,000 jobs.

Shares in Ericsson opened 8% higher today.

"We have had a solid performance in 2008," said Carl-Henric Svanberg, CEO, in a statement. "Sales grew by 11% with good demand for our entire portfolio and across the world. Professional services have continued to show strong growth. Operating margins, excluding Sony Ericsson, have steadily improved, and our financial position is strong with net cash of SKr35bn."

He added the company will reduce its staff by dismissing consultants and other temporary staff, consolidating R&D sites and other layoffs, about 1,000 of which will be in Sweden.

As the Financial Times reminds us, the company had surprised investors with a profit warning in October after some US and European mobile operators delayed upgrades of their 3G networks. It cut 4,000 jobs last year.

Svanberg said that with the recession spreading across the world, it was difficult to predict to what extent spending on consumer telecoms would be affected and how operators would act.

Svanberg continued, "To date, our infrastructure business is hardly impacted at all, but it would be unreasonable to think that this would be the case also throughout 2009.
"The economic recession is spreading across the world. The effects on the global mobile network market should not be that significant as most operators have healthy financial positions, there is a strong traffic growth and the networks are fairly loaded. It remains, however, difficult to more precisely predict to what extent consumer telecom spending will be affected and how operators will act,' he concluded.