Wireless equipment maker LM Ericsson on Friday reported first-quarter profits that rose 73 percent, with help from strong sales in Latin America and western Europe, but remained cautious on its outlook for the year.
The results, which beat analysts’ expectations, came a day after Finnish rival Nokia also posted better-than-expected earnings.
Ericsson’s net income for the quarter ending March 31 rose 73 percent to 4.64 billion kronor ($660 million) from 2.68 billion kronor in the same period last year.
Sales increased 12 percent to 31.47 billion kronor ($4.47 billion) from 28.11 billion kronor in the first three months of 2004, but were down 20 percent from the seasonally stronger fourth quarter.
Ericsson shares rose almost 5 percent to 21.80 kronor ($3.11) in midday trading on the Stockholm exchange.
Ericsson, the world’s largest supplier of telecom equipment, reiterated its forecast for the mobile systems market in 2005, saying it expects slight growth.
“Our focus on profitable growth through intensified customer partnerships and operational excellence is successful and is giving us a distinct competitive advantage,” said Chief Executive Carl-Henric Svanberg. “The increase in mobile infrastructure market share of two to three percentage points last year proves the strength of our strategy.”
Stockholm-based Ericsson saw a particularly strong quarter in Latin America and western Europe, where sales grew 24 percent and 26 percent respectively.
Sales in North America dropped 24 percent amid a slowdown in spending due to telecom mergers, but should pick up later this year as operators start the rollout of third-generation mobile networks, enabling fast data and video transmission, Ericsson said.
It also announced a deal to help Taiwanese 3G operator VIBO Telecom launch a mobile network later this year. The value of the deal was not announced.
On Thursday, Nokia Corp., the world’s largest mobile phone maker, surprised markets by reporting double-digit growth in the first quarter and raised its earlier estimate of the global mobile handset market in 2005 to 740 million units.
“The results are stronger than expected,” said Handelsbanken telecom analyst Jan Dworsky, referring to both Nokia and Ericsson. “Above all, profitability is better than expected.”
He added that questions remained about future growth in the mobile network market, especially regarding the rollout and use of 3G services.