Stockholm: Ericsson, the world’s number one mobile network gear maker, posted second-quarter core profit below expectations as operators stayed cautious about investing and parts shortages hit sales.
The telecoms equipment market has begun to show signs of life, but customers’ spending is well below pre-crisis levels.
Ericsson, which has slashed billions of crowns from its cost base to offset falling demand, said on Friday cost-cutting would be a priority while market conditions remained tough. In the second quarter, operating profit excluding joint ventures and restructuring costs was 5.3 billion Swedish crowns ($715 million) against a forecast of 5.8 billion in a Reuters poll of analysts and 6.1 billion a year ago.
Sales were down 8% year-on-year at 48 billion crowns versus a forecast of 50.5 billion. On Thursday, rival Nokia Siemens Networks reported sales down 5% in the quarter.
Like NSN, Ericsson said that its sales had been hit by industry component shortages and supply chain bottlenecks.
“We estimate that this (the shortages) had a negative impact on our sales in the quarter by 3-4 billion crowns,” Ericsson said in a statement.
Ericsson’s gross margin came in at 39%, well above forecast, with the company saying it had benefited from cost cutting and a favourable business mix.