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Ericsson warns on 3G lag

26 июля 2010

Surging use of wireless internet services has yet to spark revival in the mobile infrastructure market, the chief executive of Ericsson warned on Friday.

Hans Vestberg said demand for third generation mobile equipment was growing steadily but it was still not fully offsetting the decline in second generation networks.

His comments came as the Swedish company announced a drop in sales and weaker-than-expected profits for the second quarter. Nokia Siemens Networks, the Finnish-German joint venture, said on Thursday that it too had experienced a fall in sales during the period.

Mr Vestberg said he remained confident that increased use of wireless networks by bandwidth-hungry smartphones and mobile computers would eventually drive resurgence in the industry. But there were few signs of improvement in the second quarter as Ericsson’s sales fell 8 per cent to SKr48bn ($6.5bn), with all regions except North America experiencing decline.

Performance was worsened by a shortage of components after steep cuts in capacity by suppliers during the downturn. This prevented Ericsson benefiting from the modest recovery in demand.

Earl Lum, analyst at EJL Wireless, a US-based telecoms consultancy, said many operators were still finding credit hard to access and those with cash remained cautious about spending it. Mr Lum highlighted the saturation of 2G markets in the developing world and slower-than-expected uptake of 3G services in China among the factors troubling Ericsson.

But he backed Mr Vestberg’s expectation that the industry would rebound as operators in the US, Europe and Japan began investing in fourth generation networks capable of delivering ultra high-speed broadband services to mobile devices. “There’s a huge next wave coming, but we’ve got to get through 2010 first,” he said.

Ericsson, the world’s number one mobile infrastructure provider, is facing increasing competition from low-cost Chinese rivals such as Huawei Technologies, while NSN is also fighting to win back lost ground.

NSN this week agreed to pay $1.2bn for most of the mobile infrastructure business of Motorola, the US handset maker, to bolster its scale in North America, where Ericsson has also been expanding.

Mr Vestberg said he was confident that Ericsson had secured the “best asset” when it outbid NSN to secure the mobile network division of Nortel of Canada last year.

Net profits for the three months to June 30 were SKr1.88bn, up from SKr831m a year ago, but missing analysts’ consensus forecast of more than SKr2.7bn.

However, analysts were encouraged by better-than-expected profit margins after heavy cost-cutting by Ericsson during the past two years.

Источник: Financial Times

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