Ericsson posts 35 percent drop in 1Q profit

STOCKHOLM: Wireless equipment maker LM Ericsson on Thursday reported a 35 percent fall in first-quarter net profit due to weak results from its handset unit Sony Ericsson and higher restructuring costs.

The Stockholm-based company said net profit in the quarter was 1.7 billion kronor ($210 million) compared with 2.6 billion kronor in the same period a year ago.

The world's leading maker of mobile broadband infrastructure said sales increased by 12 percent to 49.6 billion kronor from 44.2 billion kronor.

``The effects of the global economic recession on the global mobile network market are so far limited,'' Ericsson Chief Executive Officer Carl-Henric Svanberg said in a statement.

However, he said some operators are more cautious with longer-term investments in fixed networks, and some investments have been postponed in markets where local currencies have weakened.

``It remains difficult to more precisely predict how operators will act in the current environment,'' he said.

Svanberg also said Ericsson's joint ventures, Sony Ericsson and wireless technology firm ST-Ericsson, are affected by the economic downturn and the sharp drop in consumer demand for handsets.

The company's share in earnings from the joint ventures fell to a loss of 2.2 billion kronor in the first quarter from a profit of 900 million kronor a year ago.

Restructuring charges related Ericsson's cost reduction scheme also weighed on the result by around 700 million kronor.