Ericsson’s third quarter profits drop 74 per cent

Swedish infrastructure and equipment vendor Ericsson took a beating during the third quarter of 2009, watching its net income dive 74 per cent year on year, dragged down by poor demand and further hits from its joint ventures.

Net income for the period shrank to SEK800m, down from SEK2.9bn in the third quarter of 2008. Net sales were also down 6 per cent year on year to SEK46.4bn, compared to SEK49.2bn in the third quarter of 2008.

“Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable. The strong development in Professional Services continued,” said Carl-Henric Svanberg, president and CEO of Ericsson. Svanberg said the credit environment is still tight in several emerging markets, however, other markets, including China, India, US and Japan are showing good development.

Yesterday joint venture and chip firm ST-Ericsson said net loss for the third quarter of 2009 shrank to $112m, compared to a loss of $213m in the previous quarter. Net sales were up to $728m, compared to $666m in the second quarter of 2009, but down from $1bn in the third quarter of 2008. Meanwhile, Sony-Ericsson watched its net loss for the third quarter increase to €164m, compared to a loss of €25m in the same period last year. Sales dropped to €1.6bn for the three month period, down from €2.8bn in 2008, while unit shipments were down 45 per cent year on year to 14.1 million, giving it a market share of about 5 per cent.

Yet the kit vendor is about to grow its employee base. In the wake of its managed services deal with Sprint Nextel, and the acquisition of Nortel’s CDMA business and LTE Access assets, Ericsson will absorb personnel from both units.