Ericsson reports 43% decline in Q3 2012 profit


by CBR Staff Writer| 26 October 2012

Decline was due to curbed spending by operators in a faltering economy

Swedish firm Ericsson has reported 42% decline in its profit during the third quarter (Q3) of 2012 to SEK2.18bn ($325.9m), a decrease from SEK3.8bn ($568m) reported during Q3 2011.

Ericsson president and CEO Hans Vestberg said demand for Global Services and Support Solutions continued to be good, while Networks showed a decline in sales year on year.

"In North America Networks sales developed favorably, despite the expected decline in CDMA sales, while parts of Europe, China, Korea and Russia continued to be slow," Vestberg said.

"The growing Global Services business contributes not only with top line but also with stable operating profitability and, together with Support Solutions, represented more than 50% of Group sales," added Vestberg.

Ericsson claims the decline was due to curbed spending by operators in a faltering economy and competition harmed subscriber growth.

During the period, the firm's revenue declined to SEK54.55bn ($8.15bn) from SEK55.52bn ($8.3bn), despite a 16% rise in sales in North America to SEK14bn ($2.09bn).

"There are now one billion smartphones in the world and the number is expected to reach three billion in 2017," Vestberg said.

"The introduction of new devices and applications put higher consumer demands on network performance and quality. This drives demand for our technology, software and services capabilities."

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