Ericsson 1Q08 results

Despite the recent warning of lower growth rate, Ericsson reported better-than-expected numbers. Net income fell 55% to €284m in the quarter, but includes a restructuring charge of €86m. Sales rose almost 5% to €4.7bn, with growth driven by the Americas, offsetting the decline in Europe (-7%) and the weakness of the dollar.

Gross margin declined 5pp in the quarter to almost 39%, due to unfavorable product mix with a high proportion of new network buildouts , and operating income amounted to €460m. Network sales amounted to €3.2bn (+2%) with an operating margin of 9% (down 8pp) and an EBITDA margin of 15%. The Professional Services segment reported sales of €1.1bn (+8%) with an operating margin down 2pp to 13%. The multimedia segment said its sales amounted to €418m (+16%) but with operating loss and negative EBITDA. Sales breakdown shows that WE sales (-7%) accounts for 26% of total sales, EMEA- WE (flat) for 25%, APAC (+5%) for 29% and Americas (+32%) for 19%.

Ericsson reiterates its comments of flattish mobile infra market in 2008.