Ericsson losses less dire than expected

Telecom equipment provider Ericsson reported on Thursday that net profit plunged by half last year, hit by a charge for joint venture ST-Ericsson, but posted higher than expected sales in the fourth quarter.

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The company also said it was confident about prospects this year as more operators boost their network capacity.

In 2012, Ericsson made a net profit of 5.575 billion kronor ($876 million) on sales of 227.779 billion kronor, about the same as in 2011.

Ericsson said in December that it would book a charge of 8.0 billion kronor after the announcement that French-Italian group STMicro was pulling out of ST-Ericsson.

The joint venture has not reported a single quarter of profits since being created at the beginning of 2009. In the fourth quarter of last year it reported a net loss of $133.0 million.

Chief executive Hans Vestberg said the company should benefit in the second half of 2013 from projects by telecom operators to increase the capacity of their networks.

In 2012, the company won more contracts to increase network coverage, which has traditionally been a less profitable part of the business.

"While the macroeconomic and political uncertainty continues in certain regions the long-term fundamentals in the industry remain attractive and we are well-positioned," Vestberg said in a statement.

The results for the fourth quarter were hit hard by the outcome at ST-Ericsson which Ericsson is reportedly seeking to sell.

Ericsson reported a net loss for the quarter of 6.462 billion kronor.

Stripping out costs related to ST-Ericsson, the company would have posted a rise in net profit for the period.

Sales for the quarter rose by 5.0 percent on a 12-month basis to 66.936 billion kronor. This was better than the average of estimates by analysts polled by Dow Jones Newswires who had expected a 3.1 percent rise to 65.66 billion kronor.

Network sales were particularly strong in North America, where gross
margins had previously been suffering while the company grew its market share.

Shares in Ericsson were up 9.16 percent in early afternoon trading on the Stockholm exchange, which was down 0.20 percent overall.

AFP/The Local/dl
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