For the first quarter ending March 31, the Swedish telecoms equipment maker posted net income of SEK 4.6bn ($656m), up from SEK 2.6bn ($371m) in the year-ago quarter. Ericsson also reported sales of SEK 31.5bn ($4.49bn) compared to a forecast SEK 30.3bn ($4.32bn). Ericsson said it had benefited from the deployment of 3G systems and upgrades to older GSM networks in Europe. It said the growth in gross margin is a reflection of a favorable product mix as well as continuous focus on cost of sales reductions.
The world’s largest maker of mobile-phone networks revealed that in western Europe, sales grew 26%, led by Italy and Spain. The market was driven by the roll-out of third-generation networks and upgrades to existing GSM communications networks.
Brazil and Mexico led a 24% sales increase in Latin America, also as a result of strong GSM sales. In the Asia-Pacific region sales grew 4%. India, Indonesia, Bangladesh and Pakistan contributed to the sales growth, said Ericsson. The development in China has been somewhat slower in the first quarter but should pick up going forward. Ericsson said Chinese operators are evaluating different 3G technologies, and Chinese telecommunications reform is expected in the middle of this year and should trigger the issuing of 3G licenses. Irrespective of license decisions, we expect increased infrastructure spending going forward, it said.
In North America, sales fell 24% because of a temporary slowdown in spending following mergers among phone companies, but Ericsson said sales should start to pick up as the 3G roll-out start later this year.
With such good results, it is hard to imagine that at one stage the whole future of Stockholm, Sweden-based Ericsson was in doubt after it racked up huge losses during the downturn. This forced it to more than halve its workforce from 107,000 to just 47,000 people by April 2004.
Looking forward, it said it is continuing to see solid demand in emerging markets, but is maintaining a forecast for slight growth in the mobile networks market in 2005.
