Ericcson

(ERICY)

posted a surprisingly strong profit for the fourth quarter and a sanguine outlook for 2004, sending the Swedish mobile telecom-equipment maker's American depositary receipts up 13% in premarket trading.

The company posted a profit of 100 million Swedish krona (US$13.6 million), compared with a year-earlier loss of SEK8.3 billion. Excluding massive restructuring charges, the company earned SEK5.5 billion -- well above the SEK2.4 billion profit analysts expected. Revenue totaled SEK36.2 billion, down from SEK36.7 billion in the year-earlier period -- currency exchange effects had a negative impact on sales of 9%, the company said.

In premarket trading, Ericsson's ADRs rose $3.05 to $26.75 a share.

"The mobile infrastructure market has definitely stabilized, traffic continues to grow and operators are increasing their focus on network quality and capacity," said Carl-Henric Svanberg, President and CEO of Ericsson, in the release. "The year ended with strong sales and we continue to further enhance our leading position."

Ericsson's gross margins surged 5.7 percentage points to 41.6%, which the company attributed to cost-cutting and productivity initiatives.

After a multiyear restructuring that entailed tens of thousands of job cuts, the company said "the major restructuring is over" -- including charges.

The company upwardly revised its outlook for 2004, saying that the global mobile-systems market will be in line with or post "slight growth" over last year. The company expects first-quarter sales will decrease from the fourth quarter, but show "moderate growth" over the year-earlier figures.

Ericsson also painted a rosy outlook for the longer-term growth prospects, especially in emerging markets. The company noted that worldwide mobile subscription penetration is only 21%, with 1.34 billion subscriptions. That total is estimated to reach 2 billion by 2008, and "we believe that our solutions for operators in emerging markets could increase this growth rate."