Ericsson sales improve on mobile broadband

Swedish mobile network giant Ericsson announced increased sales and a sharply higher net profit thanks to mobile broadband sales, although its earnings slightly missed expectations.

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Ericsson, the world's biggest mobile network maker, saw its fourth quarter sales grow 8 percent to 62.8 billion kronor ($9.6 billion), largely above the 2 percent hike expected by analysts surveyed by Dow Jones Newswires.

Ericsson CEO Hans Vestberg explained the strong recovery of sales was "mainly driven by a strong development in mobile broadband" in the fourth quarter after a largely disappointing 2010.

"Mobile data traffic is forecasted to almost double annually over the coming years," he added.

The company's net profit attributable to shareholders was of 4.32 billion kronor against only 314 million kronor for the same period a year earlier, but was slightly below analysts' expectations of 4.84 billion kronor.

The company's results were "mixed," Redeye analyst Greger Johansson summed up.

"What was very positive is that they show pretty good sales growth, better than in many [previous] quarters and years," he told business daily Dagens Industri.

Investors reacted positively to the company's earnings report. At 12.30pm local time, shares were up 3.25 percent to 76.25 kronor on a flat Stockholm stock exchange.

"Growth is back, and that is what we were waiting for," Ohman analyst Helena Nordman-Knutson told Dow Jones Newswires.

Sales in the fourth quarter increased the most North America, growing 49 percent compared to the same period in 2009 thanks to "organic growth as well as the acquisition of Nortel assets," Ericsson said, adding it became the largest player in the region in 2010.

China and northeast Asia posted sales up 28 percent, northern Europe and central Asia sales were up 38 percent, but sales in Western and Central Europe and in the Mediterranean were still negative, falling 4 percent and 2 percent respectively.

For all of 2010, the company's net profit increased threefold to 11.15 billion kronor, compared to 3.67 billion kronor a year earlier, when earnings were dragged down by heavy restructuring costs.

Sales in 2010 decreased 2 percent to 203.3 billion kronor compared to a year earlier, hampered by a sluggish economic context and a component shortage problem. The company said sales growth returned in the second half of the year. For the whole year, sales decreased or stayed the same in all regions except North America.

The Swedish company also benefited in 2010 from the return to profit of its mobile phone joint venture with Japan's Sony, but its other joint venture, wireless technology company ST-Ericsson, widened its losses by 10 percent in 2010, to $591 million.

Ericsson has some 90,300 employees and is the market leader in mobile network equipment ahead of Finnish-German giant Nokia Siemens, French-based telecom equipment maker Alcatel-Lucent and China's Huawei. The company said it would propose a dividend of 2.25 kronor per share, up from 2 kronor in 2009.