Ericsson reports drop in second-quarter sales

STOCKHOLM - Swedish telecommunications giant Ericsson Friday reported lower second-quarter sales and operating income due in part to “continued industry component shortages” and cautious investments from operators in some markets.

Net income - after losses and restructuring charges - was up year-on-year to two billion kronor ($274 million) from 800 million kronor in 2009.

Operating income, excluding restructuring charges, totalled 5.3 billion kronor, down 12 percent year-on-year but up 17 percent compared with the first quarter of 2010.

Net sales fell eight percent to 48 billion kronor.

“Sales were however impacted by continued industry component shortages and supply chain bottlenecks,” chief executive Hans Vestberg said in a comment, adding that Ericsson estimated this affected sales in the quarter by three to four billion kronor.

“The market conditions we saw in the second half of 2009 with mixed operator investment behaviour prevailed also in the first half of this year,” Vestberg said.

Ericsson said operators in a number of developing markets were still cautious with investments, affecting the group’s mainstay Networks division.

All regions, except North America, showed lower year-on-year sales in the quarter.

A cost saving plan had been completed in the second quarter.

Restructuring costs, not including joint ventures such as mobile phone maker Sony Ericsson, totalled two billion kronor for the quarter.