Ericsson impacted by lower profitability in Networks and increased loss in ST-Ericsson

Ericsson reported that net sales in Q212 to end-June increased one per cent year-on-year to SEK55.3 billion (US$8.13 billion), and was up nine per cent quarter-on-quarter. However, net income fell a staggering 63 per cent in the quarter to SEK1.2 billion from SEK3.2 billion a year earlier. The company said net income was impacted by lower profitability in Networks and increased loss in ST-Ericsson.

“In 2010 we made a conscious decision to gain market share and increase technology and services leadership, well aware of the short-term profitability pressure. Our focus is now on translating these gains into sustainable profitable growth," commented Hans Vestberg, Ericsson and president and CEO.

Ericsson explained that Networks sales decreased 17 per cent year-on-year to SEK27.8 billion due to the expected decline in CDMA equipment sales as well as weaker sales in China and Russia.

Global Services and Support Solutions showed strong performance, up 26 per cent and 47 per cent year-on-year respectively, with Ericsson describing that the underlying business mix, with higher share of coverage projects than capacity projects, was unchanged in the quarter and is expected to prevail short-term.