Shares in Sweden’s Ericsson AB jumped as much as 7% Friday after the world’s largest maker of wireless networks beat market expectations with a more than four-fold increase in third-quarter profit.
Profit jumped to 3.68 billion Swedish kronor ($554 million) from 810 million kronor a year earlier, boosted by stronger margins, improving results from the Sony Ericsson joint venture and fewer restructuring charges.
The result was ahead of the 3.47 billion kronor consensus forecast.
Sales for the period rose 2% to 47.48 billion kronor, marginally below the 47.73 billion kronor forecast. However, the company said sales would have been between 2 billion kronor and 3 billion kronor higher if it weren’t for continued industry-wide component shortages.
The company said its gross margin in the latest quarter improved to 39% from 36% a year earlier as a higher proportion of sales came from network upgrades and expansions, while cost-cutting efforts also helped improve margins.
Its Sony Ericsson mobile-phone joint venture with Japan’s Sony Corp. (SNE 33.43, +0.03, +0.09%) reported a third-quarter profit of 49 million euros ($68 million) earlier this month, marking its third consecutive profitable quarter.
“Mobile broadband continued to grow, especially in North America and Japan. In China, demand for 2G capacity returned during the quarter,” said Chief Executive Hans Vestberg. “Across the world, operator focus is still on reducing operating expenditure and outsourcing of operations,” he added.
In its assessment of the broader industry, Ericsson said mobile subscriptions are estimated to have increased by 176 million in the quarter, reaching 5.1 billion globally, with China and India accounting for almost 50% of the net growth.
(C) MENAFN, Market Watch, Wall Street Journal
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