Ericsson 3Q profit beats expectations, shares jump20 Oct 2008 • by Natalie Aster
Wireless equipment maker LM Ericsson AB reported Monday that net profit fell 28 percent in the third quarter on heavy restructuring charges. The announcement, four days ahead of schedule, was better than expected and sent the company's shares up 19 percent.
Net profit fell to 2.8 billion kronor (US$378 million) from 4 billion kronor a year earlier, weighed down by 2 billion kronor (US$270 million) in restructuring charges. Sales increased to 49.2 billion kronor (US$6.6 billion) from 43.5 billion kronor in the third quarter of 2007.
Ericsson shares rose 19.12 percent to 59.8 kronor (US$8.063) in Stockholm.
Ericsson spokesman Tobias Gyhlenius said the company decided to release the results early because they were significantly stronger than analysts had expected.
"They were clearly above the market's expectations," he said.
Ericsson said the strong sales were mainly driven by growth in its network business across all regions, except for Western Europe.
Nordea analyst Mats Bergstrom said sales in the networks unit were much better than expected, boosting the overall result, while other areas performed in line with analysts' estimates.
"The outlook for 2009 is cautious but it still feels quite positive," Bergstrom said.
Ericsson chief executive Carl-Henric Svanberg said the results had not been affected by the financial turmoil, but added it was hard to predict how the turmoil will affect telecom operators in coming quarters.
"We have a positive longer-term view for our industry, however, as we look into 2009, we continue to plan for a flattish market, and we have measures in place also for tougher conditions," Svanberg said in a statement.
Source: Associated Press