Ericsson boosts net, but warns on shortages

Michael Carroll
25 Oct 2010
00:00

Ericsson boosted profits and maintained sales during 3Q10, but warned that global component shortages will continue to blight the infrastructure business.

The firm grew net income 360% to 3.68 billion Swedish kronor ($554m) due mostly to profit from its Sony Ericsson handset joint venture, which reported its third consecutive quarterly profit last week.

“A key priority has been to mitigate the effects of industry-wide component shortage and supply chain bottlenecks,” CEO Hans Vestberg said.

Supply gradually improved during the quarter but “it remains a challenge to fully meet the demand for mobile broadband. While the supply chain bottlenecks have been resolved the industry-wide component shortage remains.”

Operational improvements also boosted Ericsson’s net during the quarter, as group sales grew just 2% year-on-year to 47.5 billion Kronor.

The global services division contributed 40% of the group sales, growing 3% year-on-year as increased sales of managed services offset a slight decline in network rollouts. Network equipment sales rose 6%.

However the ST Ericsson chip joint venture continues to run at a loss- up from $112 million in 3Q09 to $121 million in 3Q10. Ericsson noted the division is still in the throes of a restructuring program, and that sales grew 4% year-on-year.

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