Ericsson profit dips 30 pc in Q1, India sales drop 43 pc

STOCKHOLM/NEW DELHI: Telecom network equipment maker Ericsson on Friday reported a 30 per cent drop in profit to 1.3 billion Swedish kronor in the quarter ending March 2010, due to lower sales and high restructuring charges.

The Swedish firm's net sales stood at 45.1 billion kronor in the first quarter, a fall of 9 per cent from 49.6 billion kronor in the same period last year, the company said in a statement.

However, the company's sales in the North America region increased 99 per cent to 9.5 billion kronor.

"Group sales in the quarter declined nine per cent year-on-year with lower sales in networks, but with an increase in global services," Ericsson President and CEO Hans Vestberg said.

The company's sales in India decreased 43 per cent to 2.3 billion kronor in the first quarter against the corresponding period of the previous year due to cautious operator investments amid pending 3G auctions, the statement added.

"The decline in business volumes mainly affected mobile networks infrastructure sales, while recurring services business maintained its good development... subscription growth continues, driven by tariff competition among operators," the company stated about its India operations.

Total restructuring charges for the company's ongoing cost reduction programme are estimated at 15 billion kronor, of which about 1.5 billion kronor remains.

Cash outlays related to this programme would be made after its finalisation in the second quarter of 2010, the statement said.