Ericsson's net profit tumbles 35%, hit by joint ventures

Ericsson reported a 35-percent drop in net income for the first quarter, with the company's joint ventures, especially its handset partnership with Sony, Sony Ericsson, weighing heavily on its earnings.

The Swedish company, the world's largest maker of mobile equipment, reported that net profit for the quarter fell to $212.9 million, down from $329 million in the year-ago quarter. Net sales jumped 12 percent to $6.14 billion, up from $5.48 billion, boosted by currency gains. However, the company was weighed down by Sony Ericsson's performance. The joint venture posted a $386 million net loss for the first quarter and sales fell 36 percent. Ericsson was also weighed down by a $1.1 billion payment to create the ST-Ericsson joint venture with STMicroelectronics.

Ericsson's gross margin came in at 36.3 percent, beating expectations of 35.8 percent. Its networks unit had sales of $4.16 billion and an operating margin of 10 percent, up from 9 percent in the year-ago period.

"We see some operators are delaying longer-term investment in fixed, and the fixed operators are affected on revenues," said Ericsson CEO Carl-Henric Svanberg.

Ericsson's shares were down 5.3 percent to to 73.10 Swedish kronor ($9.08), during midday trading in Stockholm.

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