Ericsson Shares Rise on Revenue Jump

Third-quarter sales at the telecom- equipment maker rose 13%, although net income was off 28%.

Author:: Joseph Woelfel
Publish date:: Oct 20, 2008 10:32 AM EDT

Updated from 2:23 a.m. EDT

Shares of

Ericsson

rose sharply after the Stockholm-based telecom-gear company recorded an unexpected 13% jump in third-quarter revenue, boosting fellow network equipment makers.

Ericsson said net income fell to 2.8 billion Swedish kronor ($378 million) from 4 billion kronor a year earlier, a decline of 28%. Sales in the quarter were 49.2 billion kronor, a rise from year-earlier sales of 43.5 billion kronor. Analysts surveyed by Thomson Financial were looking for net income of 2.47 billion kronor on sales of 46.06 billion kronor.

Gross margin increased to 37% from 35.6% a year ago, and was flat sequentially, which Ericsson said was mainly due to a better business mix outside Western Europe and improved margins in its professional services division. Operating margin fell to 11.5% from 12.9%, although was higher when excluding its

Sony Ericsson

handset joint venture with

Sony

(SNE) - Get Report

For 2009, Ericsson said it finds it "prudent" to plan for a flattish development in the global mobile infrastructure market and good growth in the professional services market. Still, shares jumped 16.3% to $8.07 in early trading.

"We have a positive longer-term view for our industry, however, as we look into 2009, we continue to plan for a flattish market, and we have measures in place also for tougher conditions," said Ericsson chief Carl-Henric Svanberg. "Our business in the quarter has not been impacted by the financial turmoil. ... In the present financial turmoil, it is however hard to predict how operators will act and to what extent consumer telecom spending will be affected."

Among other networking companies,

Cisco Systems

(CSCO) - Get Report

added 2.5%,

Juniper Networks

(JNPR) - Get Report

gained 2.8% and

Alcatel-Lucent

(ALU)

was higher by 7.9%.