Ericsson sees Q3 net income decline 42% y-o-y

Ericsson announced a drop in income for the third quarter of 2012, as it continued to be impacted by lower profitability in its core Networks business.

In a statement, Hans Vestberg, its president and CEO, noted that although operating expenses are being reigned in and the company is seeing “steady improvements” in the execution of projects, “these improvements are encouraging, but not enough and we will continue to proactively identify and execute additional efficiency gains and cost reductions”.

For the quarter, the company announced a net income of SEK2.2 billion (US$326.8 million), down 42 per cent from SEK3.8 billion year-on-year, on revenue of SEK54.6 billion, down 2 per cent from SEK55.5 billion.

Ericsson said that demand for Global Services and Support Services “continued to be good”, while Networks saw a decline in sales year-on-year.

In North America, infrastructure sales developed “favourably”, despite the expected decline in CDMA sales, although “parts of Europe, China, Korea and Russia continued to be slow”.

In addition, Ericsson’s business mix has been impacted by a higher share of coverage and modernisation projects – rather than capacity expansions – in Europe, a situation that is “expected to prevail short-term”.

It also noted that “we see a continued macroeconomic slow down and political unrest in parts of the world, which has led to more cautious operator spending”.