Updated from 7:24 a.m.

Ericsson ( ERICY) rallied 8% early Wednesday after posting a solid second-quarter profit.

For its second quarter ended in June, the Stockholm-based company posted earnings of 5.3 billion Swedish kronor ($711 million). That reverses the year-ago loss of 2.7 billion kronor. Sales rose 18% from a year ago to 32.6 billion kronor. Per-share earnings swung to a 0.33-kronor profit from the year-ago 0.17-kronor loss.

The big wireless equipment company said second-quarter orders rose 17% from a year ago, as a result of big phone service providers rolling out so-called third-generation wireless Internet service and other big spending projects. The company said its gross margin surged to 47% from 35% a year earlier, showing that a recent cost-cutting project is taking effect.

Ericsson maintained its view that the global wireless market will continue modest growth in coming quarters, though the company said the regulatory oversight of Cingular's pending purchase of AT&T Wireless was slowing AT&T Wireless' purchasing at the moment.

The news comes at a tricky junction for fans of the Ericsson rebound story. The company's shares have surged back from the single digits over the last two years, as new management led by CEO Carl-Henric Svanberg has slashed expenses and focused increasingly on the wireless network gear that big phone companies are eager to buy.

But the big run-up in Ericsson shares naturally caused some investors to think the stock was getting ahead of itself. As a result, Ericsson shares sagged following last quarter's earnings, even after the company beat expectations and raised guidance. The recent turmoil at Scandinavian peer Nokia ( NOK) has pressured Ericsson stock as well, though results from across the industry show the wireless business is growing rapidly.

Meanwhile, the company continues to compete with big U.S. equipment makers such as Lucent ( LU) and Nortel ( NT) as well. Lucent in particular has been on a bit of a roll, last week sewing up an expected upgrade pact with Verizon Wireless.

On Wednesday, Ericsson climbed $2.23 to $28.88. That puts the stock some 15% below its spring high, but more than double its year-ago level.

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