Ericsson Profits Jump Despite Fall in Revenues

Ericsson has reported its third quarter financial results and announced that its revenues fell by 3 percent, although net profits rose by more than a third.

Sales came in at SEK53 billion (US$8.3 billion), down 3 percent on the previous year, although the company noted that if adjusted for foreign exchange losses and asset disposals, sales would have been 3 percent higher than a year ago.

Reported sales decreased YoY, mainly driven by lower sales in North East Asia and India. Segments Networks and Global Services showed slightly lower reported sales YoY, while Support Solutions saw a more significant decline in volumes. CDMA sales in North America, as well as GSM sales in China, continued to decline.

Net profit came in SEK3 billion (US$470 million) — a sharp rise of 38% over the previous year. Operating income and operating margin were positively impacted by improved gross margin and no negative effects from ST-Ericsson.

We are currently seeing sales coming under some pressure. In addition to FX, the major drivers for this development are the two large mobile broadband coverage projects, which peaked in North America in the first half of 2013. We also saw impact from reduced activity in Japan where we are getting closer to completion of a major project.”

Ericsson now sees growth in several European markets and margins are also improving as the network modernization projects gradually come to an end and we engage more in new capacity and LTE business.”

-Hans Vestberg, President and CEO of Ericsson

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