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Ericsson: Q2 Earnings Down, Shares Rise

The economic slowdown in Europe and China hits earnings


Telecommunications and mobile equipment manufacturer Ericsson (NASDAQ:ERIC) reported that its net income for the second quarter was $158 million, down 64% compared to last year.

The results disappointed Wall Street analysts, who had expected earnings of about $235 million for the quarter, Bloomberg noted.

U.S. Telecoms: Dividends Don’t Say it All
U.S. Telecoms: Dividends Don’t Say it All

Investors shrugged off the results, sending Ericsson shares up 3% in early Wednesday trading in New York.

Under pressure from the economic slowdown in Europe and Asia, the company said that sales for the second quarter inched up just 0.9% to $55.3 billion Swedish kronor, which narrowly topped analysts’ estimates of $54.9 billion kronor.

Ericsson also noted that its gross margin had fallen from 37.8% during the same time last year, to 32%, which fell short of analysts, who had estimated 33.2%.

Adding to the bad news, company officials noted that its micro-chip production joint venture with STMicroelectronics saw its revenue for the quarter fall to $344 million, down 11% from last year. The joint venture lost $318 million during the quarter, compared to $221 million in 2011.

Ericsson is not alone among telecommunications companies feeling the pinch as network providers worldwide trim purchases due to the global slowdown. Yesterday, Alcatel-Lucent (NYSE:ALU) warned that it will report a second-quarter operating loss.

Article printed from InvestorPlace Media,

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