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Ericsson posts €140mn profit for Q2

Swedish telecoms equipment vendor Ericsson has posted a SEK 1.2bn (€140mn) net profit for the second quarter of this year, down 63% from one year earlier but still placing it comfortably in the black.

Global sales increased 1% year on year in the three-month period to reach SEK 55.3bn, thanks to strong demand for Global Services and Support Solutions, while Network sales decreased due to the expected decline in CDMA equipment sales, as well as lower business activity in China.

The strong development of its Support Solutions activities was driven by billing systems and TV solutions, according to Hans Vestberg, President and CEO of Ericsson, who added that Global Services and Support Solutions together represented about half of the company’s revenues.

Mr. Vestberg predicts that in macro terms, the negative gross margin impact on European operators from their network modernisation projects will start to gradually decline from the end of 2012.

For the year ahead, Ericsson sees an increasing focus from its customers on network performance and quality of service, which will require continuous operator investments in hardware, software and services.

While Ericsson can congratulate itself for remaining profitable despite the continuing economic downturn in many markets, some of its key rivals have not been so lucky: Alcatel-Lucent and ZTE both issued profit warnings earlier this week (details here), while Nokia Siemens Networks has been forced to initiate forced layoffs.

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