Ericsson sees sales, earnings boost

Wireless infrastructure leader Ericsson today reported strong revenue and profit numbers driven by worldwide buildouts of network infrastructure, especially in developing countries.

Ericsson posted revenue of SEK 38.4 billion ($4.94 billion) for the second quarter, a 17.8% increase over the last year’s Q2. Profits also climbed 16% from SEK 5.0 billion to SEK 5.8 billion ($747 million). CEO Carl-Henric Svanberg said that many of those increases were due to network rollouts in emerging market as well as increased business in its network outsourcing and services divisions.

“The activity level in emerging markets is accelerating, which means more people have access to communications services,” Svanberg said in a statement. “In parallel, operators seek new ways of working to meet the global trends of increased tariff competition and convergence of technologies and services. We continue to focus on supporting our customers in reducing the total cost of network ownership and developing new business models.”

Svanberg particularly highlighted Cingular’s rollout of UMTS and high-speed downlink packet access services as driving 3G network deployments forward. When complete Cingular’s network will double the installed base of global Wideband CDMA networks outside of Japan, instantly creating a higher volume market for handset makers and application developers. Due in large part to Cingular’s rollout, North America was Ericsson’s largest growth region for infrastructure with sales increasing 31% year-over-year. Of the 65 commercially launched W-CDMA networks, Ericsson officials said it now has a hand in 38 of them.

Ericsson, however, was cautious in its outlook for the remainder of 2005. Growth for the entirety of 2005 will be moderate compared to the spurt of activity in 2004 when western carriers rolled out their UMTS networks. But Ericsson said it plans to make up for that moderation with further improved results in its professional services division. Professional services revenue--from network management to hosting to integration--jumped from SEK 5.0 billion in Q2 of last year to SEK 6.2 billion last quarter. Ericsson predicts that strong growth rate will continue.