Ericsson's profits hit by slowdown

Now Reading:

Ericsson's profits hit by slowdown

Text size Aa Aa

Ericsson, the world’s biggest maker of mobile phone exchange equipment, said its profit halved in the fourth quarter of 2011.

Telecoms operators invested heavily through most of last year to upgrade their networks for surging data traffic from smartphones and tablet computers.

So some slowdown had been anticipated, particularly in the US, but Ericsson’s figures were worse than expected and its shares slumped.

Ericsson forecast network operators would remain cautious on spending in the months ahead.

Ericsson’s key network unit saw sales fall nine percent year-on-year. The effects were most felt in the United States and Russia.

At the same time, the impact of lower margin contracts in Europe continued to press on Ericsson’s profitability.

“Short-term, we expect operators to continue to be cautious with spending, reflecting factors such as macro economic and political uncertainty,” said Ericsson chief executive Hans Vestberg.

“We will continue to execute on our strategy which means that the business mix, with more coverage and network modernisation projects than capacity projects, will prevail short-term,” Vestberg added.