Ericsson Shares Take Flight

The stock is up 19% as sales for the first quarter are better than expected.
By Robert Holmes ,

Ericsson

(ERIC) - Get Report

surged in early trading Friday after the Stockholm-based telecom-gear company posted stronger-than-expected first-quarter revenue.

Net income fell 55% from a year ago to 2.65 billion Swedish kronor ($442 million), while revenue rose 5% from a year ago to 44.2 billion kronor ($7.38 billion). Analysts surveyed by Thomson Financial were looking for sales of $6.97 billion.

Gross margin dropped to 38.6% from 43% a year ago, although it was up sequentially from 36.1%, which Ericsson said was mainly due to the business mix with a high proportion of new network buildouts.

Despite warning that a weak U.S. dollar could hurt the company's operations, Ericsson said it continues to plan for a flattish mobile infrastructure market for 2008, while the professional services market is expected to show good growth. Shares jumped 18.8% to $25.77 in New York.

"Our business developed well in the quarter, considering the present market environment and the declining

dollar," said Ericsson chief Carl-Henric Svanberg. "The sales development in the quarter reflects the demand for mobile infrastructure, especially in high-growth markets. Sales are picking up in the U.S. while Western Europe remains slow."

The news comes as Ericsson's chief rivals in the market for wireless infrastructure gear,

Nortel

(NT)

and

Alcatel-Lucent

(ALU)

, get set to report their own quarterly results next week. Alcatel jumped 7% in early trading and Nortel rose 3%.

Juniper Networks

(JNPR) - Get Report

, which

beat earnings targets

after Thursday's close, was up 3.6% early, and

Cisco

(CSCO) - Get Report

was tacking on 0.2%.

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