Ericsson
Net income declined to 1.72 billion kronor ($214 million), or 0.54 krona a share, from 2.65 billion kronor, or 0.83 krona, a year earlier, Ericsson said today in a statement. Revenue rose 12 percent to 49.6 billion kronor. Analysts predicted profit of 1.43 billion kronor on revenue of 50.8 billion kronor, according to the average estimates compiled by Bloomberg.
Ericsson is cutting 5,000 jobs this year at a cost of 6 billion kronor to 7 billion kronor as it anticipates spending cuts by telecommunications companies. Chief Executive Officer Carl-Henric Svanberg said in an interview last month that Stockholm-based Ericsson was winning sales as competitors including Nortel Networks Corp. and Motorola Inc. struggled to adapt to the slowing global economy.
“We have started the year with good growth ahead of the market,” Svanberg said in the statement. “Sales of network infrastructure are stable and the demand for professional services is growing.”
Ericsson won contracts from China Unicom (Hong Kong) Ltd., Verizon Wireless in the U.S. and Vodafone Group Plc in the U.K. during the quarter.
Ericsson took 702 million kronor in costs for job cuts in the first quarter and reiterated a target to save 10 billion kronor in annual costs from the second half of 2010.
Handset Challenge
Sony Ericsson Mobile Communications Ltd., the companys mobile-phone venture with Sony Corp., reported a first-quarter net loss of 293 million euros ($390 million) on April 17, its third straight quarterly loss. The venture said it will cut an additional 2,000 jobs to revive profit amid falling demand.
Huawei Technologies Co. said last week it sees sales growth slowing this year as customers rein in spending amid the global economic slump. Chinas biggest maker of telephone network equipment will work alongside Ericsson in upgrading the network of Turkcell Iletisim Hizmetleri AS, Turkeys biggest mobile phone operator.
Deutsche Telekom AG, Europes biggest phone company and an Ericsson customer, cut its annual earnings forecast last week and said it would freeze 1 billion euros of capital expenditure as customers canceled their fixed-line phones. TeliaSonera AB, Swedens largest telephone company, said last week it plans to keep capital spending at a lower percentage of sales than last year and said it may cut spending further.
Ericsson may also lose some sales as operators combine networks for greater efficiency. Telefonica SA and Vodafone Group Plc said in March they will share wireless network sites to generate hundreds of millions of pounds in savings over the next decade.
Canadian rival Nortel Networks Corp. filed for insolvency protection in January and yesterday won an extra three months to work out a plan to emerge from bankruptcy.