Ericsson reports challenging Q1 boosted by Sony Ericsson windfall

Ericsson announced that its first-quarter sales declined by four per cent year-on-year to SEK51 billion (US$7.55 billion), impacted by an expected major decline in CDMA sales as well as lower operator network spending in regions with macro-economic or political uncertainty.

Net profit though more than doubled to SEK 8.8 billion (US$1.3 billion) – thanks to the one-off gain from the sale of the company’s 50 per cent stake in Sony Ericsson.

Operating income, excluding joint ventures and the gain from the Sony Ericsson divestment, dropped to SEK2.8 billion, from SEK 6.3 billion a year ago due to lower Networks sales and lower gross margin.

Gross margin was down at 33.3 per cent from 38.5 per cent a year ago, with the year-on-year decrease attributed to increased services share, network modernisation projects in Europe and a higher proportion of coverage projects.

"Sales of high-performance mobile broadband developed well in North America, Japan and Korea, while other regions such as Europe including Russia, parts of Middle East and India were weaker," said Hans Vestberg, president and CEO of Ericsson. "CDMA continued its expected decline in the transition to LTE. Our services business showed continued momentum where especially Professional Services developed favourably. Support Solutions (formerly Multimedia) increased organic sales.