Ericsson reports plunge in Q2 profits

A fall of 70 per cent in its second quarter profits was reported this week by Swedish telecoms giant Ericsson. The company blamed the fall on the high cost of shedding staff and falling handset sales by its Sony Ericsson joint venture. Last week Sony Ericsson reported that its second quarter pretax profits were 8 million euros compared with 327 million euros a year earlier and announced plans to cut 2000 jobs worldwide. Ericsson reported that its net income fell to SEK1.9 billion (US$320 million) from SEK6.4 billion (US$1.07 billion) a year ago. Revenue rose 2 percent to SEK48.5 billion (US$8.1 billion) in the quarter. Gross margins were 37 per cent, down from 43 per cent in the same quarter in 2007. The decline was mainly due to a shift in business mix with a high proportion of new network buildouts. Sales in Western, Central and Eastern Europe, the Middle East, Africa and Asia Pacific were all down by varying degrees but sales in North and Latin America were up.

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Related stories:
Ericsson profit drops 70%, but N.A. sales up. Article
Sony Ericsson issues profit warning. Article

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