Ericsson quarterly profit beats forecasts

Telecom equipment maker Ericsson reported better than expected second-quarter earnings today in a mixed report that analysts said offered tentative signs that the firm is turning a corner.

Ericsson, the world's number one mobile network maker, beat forecasts for the second consecutive quarter with earnings before interest and tax of 4.7 billion Swedish crowns ($789m) excluding restructuring costs, against forecasts for 4.3 billion.

The firm, which earlier this year announced a plan to chop 4 billion crowns off annual costs, said restructuring costs in the second quarter came in at 1.8 billion crowns. That was nearly four times the expected amount of 502m.

'The overall business activity shows stable development,' said Ericsson's CEO Officer Carl-Henric Svanberg. 'With no major changes in the market environment, we still find it prudent to plan for a flattish mobile infrastructure market in 2008 and our focus on adjusting our cost base remains,' he said.

He added that the decline of the dollar had hit sales growth and margins in the second quarter.

The executive said network margins improved versus the first quarter despite a high proportion of new network rollouts in high-growth markets, including India.

A high share of new networks - as opposed to the more lucrative business of expanding or upgrading existing networks - was given as the main reason for a collapse in third-quarter earnings last year, which led to massive share price falls.

Sony Ericsson, the firm's joint venture with Sony Corp, last week posted a small operating loss in the second quarter and warned of a challenging market for at least the rest of the year. It has issued profit warnings for two quarters in a row as consumers have scaled back purchases of expensive phones.