Ericsson sees big boost in North American sales

While Ericsson’s overall earnings in the second quarter may have been dismal, North America was one of the lone bright spots for the world’s largest wireless infrastructure providers. Sales in North America jumped 47% year-over-year as IPTV and 3G deployments ramp up in the region.

The Swedish vendor reported a 70% fall in second-quarter profits as its handset joint venture Sony Ericsson lost ground, its own network infrastructure business remained flat, and restructuring costs took their toll. Ericsson Chief Executive Officer Carl-Henric Svanberg projected continued flat growth in the infrastructure market, but he claimed the market was stabilizing as the sales shift away from Europe to other markets. He fingered the US in particular as a market showing growth even with the devaluation of the dollar taking into account.

Sales in North America jumped from 3 billion Swedish kroner (SEK) to SEK 4.3 billion (US $720 million), which Ericsson attributed not only to new 3G network sales and upgrades but also to its growing wireline broadband and multimedia businesses. In the last two years, Ericsson has been buying its way into the wireline market, acquiring Entrisphere and Tandberg TV in 2007 and Redback Networks in 2006. Those units, now under Ericsson’s Multimedia business division, brought in SEK 4.2 billion ($703 million) in the second quarter, a 16% year-over-over improvement.

While Ericsson holds contracts with several US operators for Redback routers and its Entrisphere unit supplies GPON equipment for AT&T residential fiber rollout, a good deal of Ericsson’s North America business comes from its sizable 3G contracts with AT&T Mobility and T-Mobile USA. Ericsson is one of two vendors building out T-Mobile’s high-speed packet access (HSPA) network, which went live in New York in May, and it is supplying HSPA gear to AT&T. While AT&T has already completed much of its nationwide 3G rollout, it has been upgrading it this year, boosting network upload speeds and doubling capacity in key markets.

The US hasn’t been kind to all vendors, though. Last week Nokia Siemens Networks saw a 3.7% decline in North American revenues, despite a couple of big-name wins in the US. NSN holds the other half of the T-Mobile contract, and it was named as one of three vendors for Sprint’s WiMAX rollout. In June, it also landed a big professional services win: NSN is taking over the network operations centers for Embarq. The Embarq contract won’t go into effect until the fourth quarter, however, and NSN’s initial WiMAX networks won’t launch until next year.