Ericsson profits rise despite flat sales

Swedish telecom-equipment maker Ericsson reported a jump in quarterly profit and flat sales on Thursday, disappointing analysts. Profits rose 26 percent in the second quarter from the figure a year ago to 1.516 billion kronor (176 million euros, $230 million). This was about half the amount forecast by economists surveyed by Dow Jones Newswires. Net sales for the quarter were also below analysts' predictions, coming in at 55.3 billion kronor (6.4 billion euro, $8.4 billion), unchanged from the second quarter of last year. The company said that on a comparable asset basis and at fixed foreign exchange rates, sales rose by seven percent in the second quarter. It also pointed out an improvement in profitability, with an operating margin of 32.4 percent against 32.0 percent a year earlier. To boost profits, Ericsson has lowered its costs, while also being helped by a reduction of losses at ST-Ericsson, a joint venture with Geneva-headquartered STMicroelectronics. "We implemented our strategy to capture new market share in the network modernisation projects in Europe starting in 2010, despite their initial lower margins," the company's CEO Hans Vestberg said in a statement. "Now that these projects gradually come to an end, we can conclude that we have been successful in gaining market share and regained leadership in Europe," he said.