Swedish telecoms group LM Ericsson continued its year of strong growth yesterday, beating Wall Street earnings estimates on the back of continued huge growth in its mobile phone business. The company reported third quarter net income up 119% to $378.6m on revenues up 43.4% to $5.25bn or $0.39 per share. Those trounced analysts had predicted earnings of $0.28 a share, according to First Call. Wall Street had doubted that the storming growth Ericsson experienced this year in its mobile phone and terminal sales could continue through the third quarter. However, the company did out did its second quarter performance with the unit reporting sales up 110% to $1.43bn from $680m last year. By comparison in its core Mobile Systems business which supplies telecoms infrastructure equipment grew 28% to $2.2bn from $1.7bn last year. According to Ericsson, the handsets market although becoming increasingly competitive but during the quarter the company saw margins on its handsets improve. The company also believes that growth will be boosted by a faster move to digital handsets than many analysts are predicting aided by increasing replacement demand, with the most phones being replaced after around two years use. Ericsson’s booming handset business helped ameliorate problems in the company’s public telecoms equipment unit that is also responsible for the company’s efforts to enter the data communications market. The InfoCom Systems unit still reports unsatisfactory earnings said Ericsson CEO Lars Ramquist, adding that the continuing restructuring should see the unit returning satisfactory profits next year. InfoCom, which is responsible for companies AXE exchange systems, increased net income by 25.2% to $1.46bn from $1.16. Ramquist blamed the unit’s performance despite the profitable AXE line on the company’s investment in remote access and other datacommunications product lines. Europe and Sweden make up the majority of the company’s sales, accounting for $2.39bn during the third quarter.
