Investors appeared to agree Friday as Ericsson shares got a boost from a third quarter profit beat despite a slight dip in sales from second quarter levels.
|Ericsson CFO Jan Frykhammar.|
A few factors like restructuring charges and cost cuts helped keep Ericsson's margins at 39%. This helped the bottom line where Ericsson delivered adjusted earnings of 25 cents a share, up from the 11 cents in the year-ago quarter and well above the 16 cents analysts were looking for.
Sales for the world's largest wireless networking equipment supplier were $7.1 billion, up 2% from the $6.98 billion level a year ago, but down sequentially from the $7.2 billion mark in the prior quarter."There were some good signs, and we are happy to see some growth," said Frykhammer, during a phone interview Friday from his office in Sweden, where he reports that there is fresh snow on the ground. Looking out at the industry's spending picture, Frykhammer says he saw a lot of 2G catch up going on in developing markets with a continued push into 3G "mobile broadband" in many other regions. As for 4G, and specifically the build out of long term evolution or LTE networks, Frykhammer continues to see it as a 2012 event. Ericsson competes with equipment giants like Alcatel Lucent (ALU) and Nokia (NOK) Siemens (SI) and supplies network gear to Verizon (VZ) and AT&T (T) here in the U.S. "There's been a lot of activity when it comes to trials. Customers are really looking at it. But I don't think we'll see any big revenue streams until 2012. Asked if Ericsson is booking any 4G revenue yet, Frykhammer said no, "nothing material now and probably not until 2012." Ericsson just recently crossed a significant line from 2G to 3G. Spending on 2G, which is largely network to support voice traffic, has now fallen below spending on 3G as of this summer, says Frykhammer. On the question of Apple and the expected arrival of the iPhone at Verizon next year, Frykhammer declined to comment on whether Verizon was planning to beef up its network ahead of the anticipated arrival of a stampede of data-hogging iPhone customers. Ericsson shares were up 4% to $11.22 Friday. --Written by Scott Moritz in New York.
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