Ericsson First-Quarter Net Triples, Beating Analyst Estimates
April 27, 2011, 1:55 AM EDTBy Diana ben-Aaron
April 27 (Bloomberg) -- Ericsson AB, the world’s largest maker of mobile-phone networks, reported first-quarter profit that more than tripled, beating analysts’ estimates, paced by demand for broadband wireless equipment.
Net income reached 4.1 billion kronor ($675 million), compared with 1.3 billion kronor a year earlier, Stockholm-based Ericsson said today in a statement. Analysts predicted profit of 3.06 billion kronor, the average of 19 estimates compiled by Bloomberg show.
Revenue climbed about 17 percent to 53 billion kronor, topping the average estimate of 49.1 billion kronor by 29 analysts.
“The increase in group sales was driven by the networks segment,” Chief Executive Officer Hans Vestberg said in the statement. “The strong demand for mobile broadband resulted in five out of 10 regions showing growth year over year.”
Ericsson is profiting as so-called 3G wireless systems enabling mobile broadband spread through developing markets, paving the way for greater adoption of data-hungry devices such as smartphones and tablets. The company has said it expects worldwide mobile broadband subscriptions to double to 1 billion this year.
India approved 3G licenses last year, opening the way for companies including Aircel Ltd. and Vodafone Essar Ltd. to order equipment from Ericsson. The company appointed Fredrik Jejdling as the new head of the India business from June.
Price Pressure
At the same time, Ericsson faces mounting challenges as the wireless market matures and carriers merge to cut costs. VimpelCom Ltd. agreed this month to acquire Wind Telecom SpA, forecasting synergies of $2.5 billion, and AT&T Inc. said on March 20 that its planned merger with T-Mobile USA could deliver $40 billion in savings.
Deutsche Telekom AG and France Telecom SA agreed to set up a purchasing venture that would let the two former phone monopolies save 1.3 billion euros million annually by jointly buying equipment. CEO Vestberg is counting on higher mobile data use and machine-to-machine communications to buffer slowing growth in voice traffic.
Huawei Technologies Co., China’s biggest phone-equipment maker, said today it aims to more than triple annual sales to about $100 billion in the next five to 10 years as it expands into cloud computing and small-business networks.
Equipment prices have declined despite consolidation in the industry, including Ericsson’s acquisition of former Nortel Networks Corp. assets.
Nokia Siemens
Last week, Nokia Siemens Networks reported a first-quarter operating loss that narrowed to 142 million euros on sales that increased 17 percent to 3.17 billion euros. The Espoo, Finland- based venture between Nokia Oyj and Siemens AG aims to complete its $975 million takeover of Motorola Solutions Inc. wireless assets this week.
Sony Ericsson Mobile Communications AB, the mobile-phone venture with Sony Corp., reported first-quarter net income of 11 million euros, beating analysts’ projection for a loss, as its Android smartphone prices remained higher than expected.
ST-Ericsson, the company’s chipmaking joint venture with STMicroelectronics, had a first-quarter net loss of $178 million, widening from $154 million a year earlier. Sales shrank to $444 million from $606 million.
--Editors: Kenneth Wong, Chad Thomas
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net
