Ericsson Q2 sours hopes of turnaround in mobile gear market | business | Hindustan Times
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Ericsson Q2 sours hopes of turnaround in mobile gear market

business Updated: Jul 18, 2013 13:13 IST
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Mobile gear maker Ericsson posted second quarter operating profit well below expectations on Thursday, bruising hopes of a turn around after a long slump.

A decade of fierce competition from market-share hungry Chinese equipment vendors compounded by the long global economic slump has undermined profits in the sector.

Ericsson - the biggest player with a market share of around 35 % - has weathered the storm, but its shares have flatlined for the last 10 years.

Second-quarter earnings before interest and tax were 2.5 billion Swedish crowns compared to 2.1 billion in the year-ago quarter, including joint ventures, missing a mean forecast of 4.3 billion in a Reuters poll of analysts.

Results were hit by a 0.9 billion crown one-off charge for divestments, but sales and the company's gross margin also came in under analysts' forecasts.

Sales at the world number one mobile network equipment maker were 55.3 billion crowns against a forecast of 56.3 billion. The gross margin was 32.4 % versus a forecast 32.6 %.

On the positive side, however, the second quarter saw Ericsson's key network unit post 8 percent sales growth adjusted for currencies, extending a slow recovery that started at the end of 2012, but still below expectations.

After a tough 2012, when Ericsson's networks unit saw sales drop 12 %, operators have started to gradually increase investment in high-speed mobile broadband networks in some regions of the world.