Ericsson Comes Up Short

Earnings fail to hit targets, sending shares down.
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Ericsson (ERIC) - Get Report shares fell 5% in early action after the wireless gear company missed second-quarter earnings targets.

The Stockholm-based company cited soft sales in Europe as it attempts to integrate its recent acquisitions of Redback and Tandberg TV.

Ericsson made 6.4 billion Swedish kroner ($963 million) in the latest quarter, up from 5.7 billion kroner a year earlier. Sales rose 8% from a year ago to 47.6 billion kroner ($7.16 billion).

Pretax profit was 9.3 billion kroner, missing the 9.8 billion-kroner estimate cited by Reuters.

"We continue to outpace the market," said CEO Carl-Henric Svanberg. "Sales showed an encouraging year-over-year increase this quarter, primarily driven by Asia Pacific. Europe, Middle East and Africa were softer while we see improving trends in the Americas. Margins were stable with improved cash generation.

"We are in a start-up phase in multimedia, where sales and margins will vary," he added. "Tandberg Television is now part of our group and will add significant strength. On the handset side, Sony Ericsson had another quarter of strong performance and market share increase."

The company said a recent broadband deal with

AT&T

(T) - Get Report

shows its growing strength in North America, where the company competes with the likes of

Nortel

(NT)

and

Alcatel Lucent

(ALU)

.

Shares fell $1.94 to $40.15 in premarket trading in New York.