Ericsson hit by falling profits

Ericsson hit by falling profits
Swedish telecom equipment manufacturer Ericsson announced third quarter pretax profits of 4 billion kronor ($580 million), a 35 percent drop from the 6.2 billion kronor reported for the same quarter last year.

Net profits fell to 810 million kronor for the quarter, down from 2.84 billion a year earlier and below analysts’ expectations of 1.65 billion kronor, according to the Market Watch news service.

Ericsson’s turnover also dropped from 49.2 billion in the third quarter of 2008 to 46.4 billion this year.

The company’s pretax profits exclude restructuring costs of 2.7 billion kronor, which when included bring Ericsson’s profits to 1.5 billion kronor

Analysts had expected Ericsson to report pretax profits of 2.5 billion kronor, according to a Reuters survey.

“Our cost reduction activities are running ahead of plan with further opportunities for efficiency improvements and savings, Ericsson CEO Carl-Henric Svanberg said in comments accompanying the report.

While admitting that a “tougher market environment” had led to a drop in sales, Svanberg remained upbeat about Ericsson’s prospects to capitalize on the growth of mobile broadband services.

“We expect mobile broadband to show a similar exciting development over the years to come, not least as the vast majority of the world’s population will be able to reach internet only through mobile technology. We are well positioned to lead our industry forward,” he said.

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