Ericsson performs better than expected in third quarter

Swedish vendor Ericsson is keeping its head above water amid the financial turmoil, reporting stronger than expected earnings on Monday.

For the third quarter of 2008, Ericsson recorded a net income of SEK2.8bn (Eur283m). This figure was down 28 per cent on the SEK4bn reported for the same period in 2007, but was still a better bottom line than expected.

Sales were healthier, growing 13 per cent year on year to SEK49.2bn, bolstered by strong performance in all regions except Western Europe.

Revenues from the Networks unit were up 16 per cent year on year, with build outs and network expansions experiencing particularly strong growth in India, Indonesia, Russia and Brazil.

Sales in Professional Services grew 7 per cent, with managed services sales up 3 per cent. The total number of subscribers in managed operations now amount to 225 million, of which 60 per cent are in high-growth markets.

The Swedish vendor’s Multimedia unit recorded an increase in sales of 10 per cent year on year, with revenue management, including LHS, and Tandberg Television showed particularly strong development.

In the background, an annual cost reduction plan of SEK4bn is well under way and should have full effect from 2009.

“During the quarter, sales grew by 13 per cent with strong development in all regions except Western Europe,” said Carl-Henric Svanberg, president and CEO of Ericsson. “Our business in the quarter has not been impacted by the financial turmoil. Our customers are generally financially strong. In addition, networks are loaded and traffic shows strong increase. 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,” Svanberg added.

Handset joint venture Sony Ericsson reported its third quarter results last week.

In related news, Ericsson said Monday that it has been tapped by chip manufacturer Intel to provide HSPA mobile data platforms for Mobile Internet Devices (MIDs) – a range of smaller than notebook pocketable gadgets.

Ericsson’s HSPA offering is targeted at Intel’s Moorestown platform and is scheduled for release in the 2009/10 timeframe. Based on the Atom processor, Moorestown is Intel’s next generation MID platform which will include HSPA as well as WiMAX as its wireless technologies.