Ericsson says quarterly profits plunge

Telecom equipment giant Ericsson reported a 57-per cent drop in second-quarter net profits, a far weaker result than expected, as the economic crisis ate into the mobile phone market.

The Swedish company managed net profits of 831 million kroner (€78.2 million), down 57 per cent on the same period last year and nearly twice as bad as the average predictions of analysts.

Experts polled by Dow Jones Newswires had forecast a profit almost double this.

"The effects of the global economic climate on the mobile infrastructure market are now more notable, especially in markets with currencies under pressure and a tougher credit environment," said chief executive officer Carl-Henric Svanberg in a statement.

Sales were up seven per cent compared to the same period a year before, at 52.1 billion kroner, but this amounted to a three-percent fall when exchange rate fluctuations were taken into account.

The firm said it was also hit by restructuring costs. It announced 5,000 job cuts in January.

Ericsson's Finnish rival Nokia last week reported a 66 per cent collapse in quarterly net profit to €380 million because of a drop in handset sales and weak prices.

The Swedish firm said however that demand for internet services was picking up. That market accounted for just over a third of its sales in the second quarter.