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Fall for Ericsson's profit as largest business unit saw weak performance

Wednesday, 25 April 2012
Ericsson delivered a mixed quarterly report on Wednesday morning. As a whole the report was slightly worse than expected and the telecom company's principal business unit Networks plummeted from last year.

Ericsson reports results on Wednesday morning offered a mixed bag. Sales were worse than expected, but gross margins were better than analysts expected. The major negative surprise was Mobile Networks.

"It's a better business mix than people thought. When you look historically there have been several first quarter Faroe which Ericsson had good gross margins," said Greger Johansson, an analyst at Redeye.

"They say that the mix has not changed, but somewhere it must have changed. It may be because they sell more software than hardware, "he continues.

Sales of Ericsson's largest business, Networks, decreased compared to last year and was also lower than expected. Sales landed at Skr 27.3 billion, compared with the expected Skr29.6 billion and last year's Skr33.2 billion. Gross margin of 6 percent was down from 17 percent compared to a year earlier and 8 percent in the fourth quarter of 2011.

Ericsson's operating profit excluding sales of Sony Ericsson and such amounted to Skr 2.8 billion in the first quarter, down from Skr6.3 billion last year. Expectations were Skr2.9 billion, according to analysts.

Gross margin was 33.3 percent, down from 38.5 percent last year. It is still a good bit better than expectations which stood at 30.6 percent according to analysts.
The report contains a positive NRI of Skr7.7 billion from the sale of mobile manufacturer Sony Ericsson.

Profit before tax was Skr 9.1 billion, but it is a positive one-off effect of EUR 7.7 billion from the sale of mobile manufacturer Sony Ericsson.

Full reports here
By Scancomark.se Team



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