Ericsson Profit Falls on Restructure Charges

Second-quarter earnings at the telecommunications-equipment maker fell as it recorded restructuring charges and was hurt by losses at its joint ventures.
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Updated from 1:55 a.m. EDT

Swedish telecommunications maker


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said second-quarter earnings fell to 831 million Swedish kronor ($110.7 million) from 1.9 billion kronor as the company recorded restructuring charges and was hurt by losses at its Sony Ericsson and ST-Ericsson joint ventures.

Ericsson said sales of 52.1 billion kronor in the quarter rose 11% year-over-year for comparable units, but fell 3% when adjusted for foreign exchange.

The company recorded 3.6 billion kronor of restructuring charges in the second quarter.

Gross margin, excluding restructuring charges, fell to 36.3% in the quarter from 37%, but was flat sequentially.

Ericsson, in a statement Friday, said its target to reduce costs by 10 billion kronor from the second half of 2010 remains.

Sony Ericsson, a joint venture with Japan's


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, last week posted a second-quarter loss of 213 million euros. Chipmaker ST Ericsson, another joint venture, also weighed on the parent company's results with an adjusted operating loss of $165 million.

Ericsson, which had earlier seen limited effects of the global recession, said the downturn was now becoming more visible in the mobile network market.

"At the same time the consumer demand for new services and broadband capabilities are quickly accelerating and rollout of new technologies is ongoing in the world's leading economies," CEO Ericsson CEO Carl-Henric Svanberg said.

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