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July 25, 1997updated 05 Sep 2016 12:16pm

ERICSSON MOBILE PHONE BUSINESS GROWS 102% IN FIRST HALF

By CBR Staff Writer

Swedish telecoms group LM Ericsson AB, yesterday posted a storming 44% leap in first half pre-tax earnings yesterday, sending the company’s share to a record high. Pre-tax profits of 6.10bn crowns ($779m) for the first half of 1997 was more than one billion crowns ($130m) higher than market consensus estimates and shares soared over 10% before stabilizing at 361 crowns, up 32 crowns. Ericsson’s growth came mainly in its mobile telephone unit, which posted sales up 102% at 18.39bn crowns ($2.39bn) compared to 9.09bn crowns ($1.18bn) for the same period a year earlier. The growth tilts the company’s revenue base away from its core carrier and mobile telephony infrastructure business into the fiercely competitive and lower margin handset business. However, in the half year, Ericsson said price stability in the handset market had been stronger than expected. Ericsson’s revenues from its mobile infrastructure division, its largest business area, was up 23% to 30.10bn crowns ($3.91bn) from 23.45bn ($3.04bn). The public telecoms unit, Infocom Systems, reported sales up 18% to 21.47bn crowns from 15.95bn. Chief executive, Lars Ramquist said earnings for the Infocom unit, which is responsible the company’s AXE exchange offerings, were unsatisfactory and that a continuing rationalization program seeks to deal with strong price pressure in the market. Separately, Ericsson also announced that it has signed a letter of intent with Bellsouth Mobility Inc of the US to supply its D- Amps 1900 system equipment for five states. Ericsson said the deal is worth around 1.55bn crowns ($201m). The systems will be installed in Bellsouth’s Basic Trading Area markets in Alabama, Florida, Georgia, Louisiana and Mississippi. Under the contract, Ericsson is to supply and install six switches and more than 500 of its RBS 884 Macro base stations across the states. The technology provides mobile telephone users with advanced functions like caller identification, security services and short messaging systems. á

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