Ericsson second-quarter net misses estimates on venture losses

Ericsson AB, the world’s largest maker of wireless phone networks, posted a second-quarter profit that missed analysts’ estimates because of losses at its mobile- phone and semiconductor joint ventures.

Net income plunged 56 percent to 831 million kronor ($111 million), or 0.26 krona a share, from 1.9 billion kronor, or 0.59 krona, a year earlier, Stockholm-based Ericsson said today in a statement. Analysts had anticipated profit of 2.1 billion kronor, the average estimate compiled by Bloomberg.

The company’s joint ventures, ST-Ericsson and Sony Ericsson Mobile Communications Ltd., posted quarterly losses. ST- Ericsson, a venture with chipmaker STMicroelectronics NV, reported a second-quarter net loss of $213 million yesterday. Sony Ericsson’s second-quarter net loss was 213 million euros ($302 million), as sales fell 40 percent. The losses shaved 2.1 billion kronor from Ericsson’s pretax profit.

“The effects of the global economic climate on the mobile infrastructure market are now more notable, especially in markets with currencies under pressure and tougher credit environment,” Chief Executive Officer Carl-Henric Svanberg said in the statement.

Revenue rose 7.4 percent to 52.1 billion kronor, missing the 53.3 billion-krona average of analysts’ estimates.

Ericsson fell 0.4 percent to 77.50 kronor in Stockholm trading yesterday, bringing its market value to 251 billion kronor.

Nortel Interest

Ericsson is bidding on assets from bankrupt Canadian equipment provider Nortel Networks Corp. Winning today’s auction would boost its position with customers in the U.S., where it won a contract for network management from Sprint Nextel Corp. and will build a next-generation network for Verizon Wireless.

The company last month named Hans Vestberg to succeed Svanberg as CEO at the beginning of next year. He’s preparing to take over as telecommunications customers have reined in spending on new networks amid the global economic slump.

Telenor ASA, the biggest Nordic phone company and an Ericsson customer, said yesterday it will trim full-year capital expenditure to between 16 percent and 19 percent of revenue. The company’s capital spending was 21 percent of sales in 2008.

Competitor Nokia Siemens Networks, a venture between Nokia Oyj and Siemens AG, had a second-quarter operating loss of 188 million euros on a 21 percent sales slump, Nokia said July 16.

Source: Bloomberg

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