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Ericsson surprises with a profit of 5.9 billion
Thursday, 20 October 2011
Ericsson reported a profit before tax of Skr 5.9 billion for the third quarter of 2011. That compares with profit of Skr6.1 billion a year ago. Sales amounted to Skr55.5 billion, compared to Skr47.5 billion a year earlier.

This indicates that Ericsson continues to grow rapidly and as the telecommunications company reports a profit that exceeds expectations. Changes in business mix, however, takes on profitability.

Operating profit excluding share of profit from joint ventures, was Skr6.3 billion, compared with Skr6.2 billion in the corresponding periods of 2010.
Analysts on average had expected that this result would land at Skr5.75 billion, according to Reuters. The average turnover was forecast at Skr 52.9 billion.

Cash flow, excluding payments for Ericsson's restructuring, was Skr2.4 billion, compared with Skr12.7 billion a year earlier.
Gross margin was 35.0 percent, compared with 39.0 percent for the same periods of 2010.
For Ericsson's largest segment, Networks, turnover rose by 25 percent compared with the corresponding period of 2010 to 32.5 billion. The operating margin fell to 13 percent, from 17 percent in the third quarter of last year.

Sales within the Global Services grew by 7 percent to Skr20.4 billion. Operating margin decreased to 9 percent, from 11 percent a year earlier.
Multimedia sales increased by 11 percent to Skr2.6 billion. Operating margin improved to 3 percent, compared to -8 percent in the third quarter of 2010.

The increase of 17 percent in the third quarter was driven by continued strong demand for mobile broadband and increased revenues to service the area, writes Ericsson CEO Vestberg in the interim report.
For comparable units, and adjusted for currency effects and hedging, the increase was 24 percent.
"The results we achieved during the year reaffirm our indications of a strong global market share," writes Vestberg.

He adds that a higher proportion network development projects and with more network modernisation in Europe affected the gross margin negatively.
Impact on Ericsson's supply chain from the devastating natural disaster in Japan in March, disappeared during the quarter. Lead times are now back to normal levels, the report said.
"With economic unrest in parts of the world there can be a somewhat lower short-term investing among operators as a possibility," writes Vestberg.

The figures Ericsson reports in the third-quarter 2011, includes restructuring costs of Skr0.4 billion. The figures for the corresponding period of 2010, restructuring costs, however, are excluded.
If these costs are included in both periods, then quarterly profit will rise from Skr5.1 billion to Skr5.9 billion.
By Scancomark.se Team

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