Updated from 2:29 a.m. EDT

Telecommunications equipment maker Ericsson ( ERIC) said first-quarter profit fell 35% to 1.72 billion kronor ($216 million) from 2.64 billion kronor a year earlier as demand for handsets from joint ventures Sony Ericsson and ST-Ericsson declined.

Sales in the quarter rose 12% to 49.6 billion kronor.

In a statement Thursday, Ericsson said the effects of the global economic recession on the mobile network market are so far limited.

"We have seen operators, in a few markets where local currencies have depreciated dramatically, postpone investments," Ericsson said. "Some operators are also more cautious with longer-term investments in fixed networks, such as rollout of fiber networks. Most operators, however, have healthy financial positions, there is a strong traffic growth and the networks are fairly loaded."

The company said it remains "difficult to more precisely predict how operators will act in the current environment."

Sony Ericsson, a joint venture of Ericsson and Japan's Sony ( SNE), earlier this month reported a loss of 293 million euros for the first quarter as sales fell.

Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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