Ericsson rings in solid Q2 on network upgrades

Ericsson has reported a strong surge in its second-quarter sales, citing a boost from third-generation rollouts, Global System...

Ericsson has reported a strong surge in its second-quarter sales, citing a boost from third-generation rollouts, Global System for Mobile Communications (GSM) expansion and healthy consumer demand for new services.

The Swedish mobile telecommunication equipment provider predicted only slight to moderate growth for the remainder of the year, however, as mobile operators catch up on last year's limited investments.

Ericsson reported an 18% increase in net sales to £2.35bn (as of 30 June, the last day of the quarter being reported) compared to £2bn for the same period a year ago. Second quarter sales represented a 16% sequential increase over the previous quarter, as carriers sought to upgrade their networks, the company said.

Net income came in at £38.3m, compared to a loss of £19.5m in the second quarter of last year.

A proliferation of 3G, GSM and Enhanced Data Rates for GSM Evolution (Edge) upgrades aided the company across all regions, thanks to its large installed base, Ericsson chief executive Carl-Henric Svanberg said. Third-generation sales were spurred in part by the growing number of 3G handsets available, he said.

Mobile network orders increased 27% during the period to £1.84bn, compared to £1.44 a year ago.

Ericsson cited strong demand for 3G technologies in North America, Europe and Asia. China and South East Asia are also leading continued demand for 2G and 2.5G technologies, it said. Additionally, the company has also been working to launch new Wideband Code Division Multiple Access (WCDMA) networks and introduced 10 new networks during the quarter, bringing its total to 37. WCDMA subscriptions grew from 4.4 million to seven million in the second-quarter, it said.

While only moderate growth is predicted from the mobile systems market for the remainder of the year, Ericsson said confidence has returned to the industry as consumers are showing that they want advanced mobile services.

Scarlet Pruitt writes for IDG News Service

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