Ericsson sees profits dive as crisis hits

SWEDISH telecoms equipment giant Ericsson yesterday blamed the global downturn for a 71.5 per cent plunge in third-quarter profits.<br /><br />The firm had hitherto proved resilient to the global financial crisis, managing to maintain profits and sales, but the reality finally caught up with it as capital spending cuts by operators fed through.<br /><br />Ericsson&rsquo;s sales fell to 46.4bn kronor (&pound;4.1bn) , below forecasts.<br /><br />&ldquo;The top line is so much below our expectations that it will set the tone for the day. Ericsson says it&rsquo;s a tough market, and this creates concerns over demand,&rdquo; said Swedbank analyst Hakan Wranne.<br /><br />Ericsson reported operating earnings of 5.5bn kronor, excluding restructuring charges and its loss-making joint ventures, down three per cent from a year ago, and missing the 5.8bn kronor average poll forecast.<br /><br />The company said its 10bn kronor cost cutting programme was ahead of schedule, and it had found additional savings possibilities for the coming quarters, but did not quantify. <br /><br />Sales at Ericsson&rsquo;s key network equipment unit slipped eight per cent year-on-year, while sales at its Professional Services unit and Multimedia units lagged forecasts.<br /><br />Chief executive Carl-Henric Svanberg, who leaves the firm at the end of the year, said the economic climate was affecting the global mobile infrastructure market, and the credit environment was still tight in several emerging markets. Ericsson has consistently declined to give a market outlook.