Ericsson sales boosted by mobile broadband

January 25, 2011
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, STOCKHOLM, Jan 25, 2011 – Sweden\’s mobile network giant Ericsson said Tuesday it booked increased sales and sharply boosted its net profit thanks to mobile broadband sales, although earnings slightly missed expectations.

Ericsson, the world\’s biggest mobile network maker, saw its fourth quarter sales grow 8.0 percent to 62.8 billion kronor (7.0 billion euros, $9.6 billion), significantly above the 2.0 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 fourth quarter net profit attributable to shareholders was of 4.32 billion kroner against only 314 million in the same period a year earlier, but was slightly below analysts\’ expectations of 4.84 billion kronor.

The company\’s results were thus "mixed," summed up Redeye analyst Greger Johansson.

"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, with shares up 3.72 percent to 76.60 kronor at 0930 GMT.

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 North East 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 4.0 percent and 2.0 respectively.

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

Sales in 2010 decreased 2.0 percent to 203.3 billion kronor compared to a year earlier, dragged down by a sluggish economic context and a component shortage problem. The company said sales growth returned in the second half of the year.

Ericsson has 90,000 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 2.0 kronor in 2009.

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