Ericsson doubled its second quarter profit but fell short of analysts’ expectations, thanks to a downturn in carrier spending and a component shortage.

 

Network revenue was hit by stalled carrier investment in India, where the government has sought security clearances for all foreign network gear, and the winding down of China’s 3G rollout.

 

Ericsson’s net income of 1.88 billion kronor ($258m) was twice that of 2Q09, but below the 3.12 billion kronor forecast by analysts polled by Bloomberg.

Revenue was down 8% to 48 billion kronor, falling short of the 50.8 billion kronor Wall Street had expected.

 

A global components shortage and supply chain bottlenecks had cost the firm between 3 billion and 4 billion kronor in network sales during the quarter, the company said. 

 

North America was Ericsson’s sole growth market, with network revenue up 128% to 13.1 billion kronor as operators invested in capacity upgrades, while India and China sales were down 63% and 36% respectively.

 

 

CEO Hans Vestberg said “mixed operator investment behavior,” contributed to a 12% fall in sales at the networks business. However, operating margins in the unit increased from 12% to 13%.

 

Global services sales were flat on 2Q09, at 20.1 billion kronor.

 

Semiconductor JV ST-Ericsson cut its losses from $213 million to $139 million despite an 18% fall in sales.

 

Vestberg said the acquisition of Nortel’s CDMA and GSM businesses and the cost of LTE trials had increased operating expenses.

 

With the completion of Ericsson cost reduction’s program, begun in early 2009, “cost and capital efficiency will remain top of our agenda,” he said.

 

Ericsson’s stock fell 86 cents on Nasdaq on Friday, and declined another 10 cents in after-hours trading, closing at 11.18.