Ericsson suffers huge profit slump amid downsizing | Business| Economy and finance news from a German perspective | DW | 24.04.2013
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Ericsson suffers huge profit slump amid downsizing

Swedish telecommunications group Ericsson has logged a sharp drop in profits in the new year due to downsizing its operations at home and other factors. But a one-off effect distorted the latest results.

The world's largest supplier of mobile phone infrastructure continued struggling in an increasingly competitive environment for building and upgrading mobile networks and system services, Ericsson admitted in its first-quarter earnings report on Wednesday.

The Swedish company booked an 86-percent decline in net profit in the first three months of the year, partly connected with the costs for downsizing its Swedish operations and a stronger Swedish currency weighing on results.

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But the major reason for the drastic year-on-year slump were profit-driving gains made in 2012 from the sale of a stake in a venture with Sony.

Sales up

Things looked positive for Ericsson on the revenue side. The wireless equipment maker posted a two-percent increase in sales totaling 52 billion kronor ($7.8 billion, 5.99 billion euros).

CEO Hans Vestberg said sales grew in eight of ten regions worldwide, led by a 23-percent jump in North America. Latin America and northeast Asia did worst, booking declines by 9 percent and 34 percent respectively.

Ericsson said it managed about 950 million subscribers globally during the first quarter, thus showing no significant change from the number of clients in the preceding three months. Ericsson announced in March it was splitting up a joint venture with STMicroelectronics, one of Europe's biggest chipmakers, because of a fall in global demand.

hg/ccp (AP, dpa)

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