Ericsson Reports Strong Third Quarter - InformationWeek

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10/20/2008
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Ericsson Reports Strong Third Quarter

The company saw sales increase in every region but Western Europe, and its stock soared as the third-quarter results beat analysts' expectations.

Despite a global economic slowdown, telecom-equipment supplier Ericsson saw a rise in its third-quarter sales and had a stronger-than-expected quarter.

The company saw strong sales growth in nearly every market except for Western Europe, and it saw overall sales increase 13% to $6.6 billion. The results were released four days ahead of schedule, and the company said this was done because the results were significantly better than what analysts had expected. The news sent Ericsson's stock soaring by more than 16% on the Swedish stock market.

The company's networks division saw improved margins in its networks division, and also saw its gross margin increase in the third quarter to 37% from 35.6%.

"Our business in the quarter has not been impacted by the financial turmoil. Our customers are generally financially strong," said Ericsson CEO Carl-Henric Svanberg, in a statement. "In the present financial turmoil, it is however hard to predict how operators will act and to what extent consumer telecom spending will be affected."

The relatively strong showing came despite a net income loss to about $379 for the quarter, compared with about $544 million a year ago for the same timeframe. The company is in the midst of a massive restructuring effort that cost it about $270 million in the quarter, but it should cut costs by about $672 million a year.

The company remained cautiously optimistic for the upcoming months.

"We have a positive longer-term view for our industry, however, as we look into 2009, we continue to plan for a flattish market, and we have measures in place also for tougher conditions," said Svanberg in a statement.

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