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Q3 group sales up for Ericsson

Thu, 10/20/2011 - 3:41pm
Monica Alleven, Wireless Week

Shares in Ericsson were up more than 6 percent, to $10.28, in early morning trading after the company reported better-than-expected third-quarter results.

Group sales in the quarter increased by 17 percent year-over-year, driven by a continued strong demand for mobile broadband and increased services revenues, CEO and President Hans Vestberg said.

North American sales decreased 6 percent year-over-year and 2 percent sequentially. The company said a positive uptake in the services and OSS/BSS businesses in the quarter could not fully offset the impact from a slower networks business after a period of high operator investments in network capacity.

In an interview, CFO Jan Frykhammar said the company had seen some slowdown in business in North America in the second quarter, particularly with regard to CDMA and capacity on HSPA, and that was visible in the third quarter. Still, Ericsson's market position in North America remains strong, and it's seen some good development in the services side.

"North America has been a growth engine for the company for many quarters now," he said. "It's nothing that I'm particularly worried about," as there's a lot happening in the market, and many operators are looking at their 4G strategies.

As for Ericsson's joint ventures, whereas about 80 percent of Sony Ericsson's sales are coming from smartphones, ST-Ericsson is closer to the 50 percent level when it comes to supplying chipsets for feature phones versus smartphones, so it still has a bigger transition to complete, he said.

Last week, Sony Ericsson posted a break-even third quarter and announced it is shifting its entire portfolio to smartphones.

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