Mobile giant expects bigger profits

Swedish telecommunications equipment manufacturer Ericsson is expecting strong second quarter results next week with a profit of nearly $750m.

    A worldwide demand for mobiles has increased profits

    The company, which only pulled itself out of the red in the final quarter of last year, has been buoyed by the rebound in the sector, the effects of the drastic restructuring measures it has taken, and unexpectedly good results of its portable phone partnership with Sony of Japan.

    Analysts surveyed by SME Direkt expect Ericsson to post a second quarter profit of around 5.5 billion kronor (598 million euros, $745m) compared to a loss of 3.6 billion kronor during the same quarter last year.

    Sales were expected to have risen by 9.5% from 27.6 to 30.2 billion kronor.

    "We expect that the results will reflect the continuing rise in demand and that they have met their cost-cutting objectives," said Inge Heydorn, an economist with Deutsche Bank.  

    Unclear year

    The 89 million euros net profit that Sony Ericsson rang up in the second quarter, against a net loss of 88 million euros in the same period of last year, should help boost Ericsson's overall results, she said.

    "One expects that Ericsson will post good second quarter results," said SEB analyst Johan Stransberg, "but it's uncertain what they'll say for the rest of the year."

    So far Ericsson has not made any forecasts save saying in April that it expected that global demand for mobile telephones and systems would rise moderately.

    Last week, Ericsson's Finnish rival Nokia posted a 14% rise in net profit in the second quarter to 712 million euros, but a grim forecast for the rest of the year sent shares in portables manufacturers tumbling.

    Ericsson's ordinary shares closed at 19.6 kronor on Friday.

    SOURCE: AFP


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