Ericsson Earnings Hurt by Lower Spending by U.S. Network Operators

By Juhana Rossi 

Sweden's Ericsson AB on Thursday reported a weaker-than-expected net profit for the first quarter as higher operating costs and lower spending by the U.S. network operators weighed on its earnings.

Ericsson, the world's leading telecom-equipment maker, said that although favorable currency movements boosted its revenue, its profitability suffered because of restructuring charges and a shift in its sales to lower-margin projects.

The company's first-quarter net profit came in at 1.32 billion Swedish kronor, or 0.40 kronor a share. The figure missed a median forecast of 2.23 billion kronor, or 0.68 kronor a share, in an analyst poll by Reuters. In the year-ago period Ericsson's net profit was 2.12 billion kronor, or 0.65 kronor a share.

Ericsson said net sales in the three months to March 31 rose 13% to 53.52 billion kronor, from 47.51 billion kronor in the year-earlier period, beating analysts' forecasts of 53.49 billion kronor, according to the Reuters poll.

Write to Juhana Rossi at [e-mail]

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