Ericsson ratchets up profits in 2010

Swedish kit vendor Ericsson benefited from ongoing improvements at its handset joint venture Sony-Ericsson and a decrease in restructuring charges through 2010, reporting on Tuesday a 172 per cent year on year increase in annual net profits.

Income for the year hit €11.2bn, compared to €4.1bn in the same period last year. For the fourth quarter, net profit climbed €504 per cent year on year to €4.4bn on the back of better earnings from Sony Ericsson.

Annual revenues dropped two per cent year on year to €203.3bn, but climbed eight per cent during the fourth quarter to hit €62.8bn.

Sales in networks increased 14 per cent year on year and 40 per cent sequentially, primarily driven by increased demand for mobile broadband and investments in 2G expansions in China. Global services sales decreased one per cent year-over-year and increased 20 per cent sequentially as a result of lower levels of network rollout following an industry wide component shortage earlier in the year. Managed services grew five per cent year-over-year and with 16 contracts signed in the quarter.

Operating loss at chip venture ST-Ericsson increased sequentially to $119m in the fourth quarter mainly due to higher operating expenses as well as price erosion due to ongoing legacy product transition. However, the chip vendor also saw $13m in savings as it completed its restructuring plan.

“In 2010, mobile broadband subscriptions increased 30 per cent to approximately 500 million, still only representing some ten per cent of total mobile subscriptions. We expect the strong uptake for mobile broadband to continue in 2011, with number of mobile broadband subscriptions expected to double and hit one billion already this year,” said CEO Hans Vestberg. “This will be driven by more smartphone devices, including entry level smartphones as well as tablets. Mobile data traffic is forecasted to almost double annually over the coming years.”