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Marconi weighs on Ericsson's 2Q results again

01 августа 2006
Ericsson's acquisition of Marconi once again weighed down the world's largest infrastructure vendor's quarterly results. Yet the vendor was slightly ahead of analyst projections thanks to good performance from its handset joint venture with Sony. Ericsson reported net profits of $780 million in the second quarter, down 2 percent from the same period in 2005. The Marconi group recorded a loss of $24 million in the second quarter, but SonyEricsson almost doubled its net income.

The acquisition of Marconi’s equipment business has weighed on Ericsson’s second quarter profits but the Swedish group still came in just ahead of expectations due to a solid performance from its handsets joint venture Sony Ericsson.

The world's largest mobile infrastructure equipment supplier reported net profits of SKr 5.7 billion ($780 million) down 2 per cent from the same period in 2005, but an increase of 25 per cent compared with the first quarter of 2006.

The Marconi group, bought last year for $2.2 billion, made a loss of SKr200 million ($24 million) in the second quarter. Sony Ericsson reported earlier this month, almost doubling net income.

Long term, Ericsson said Marconi would be one of the cornerstones of its business providing converged broadband networks that can offer voice, data and video services.

Revenues for the quarter were SKr44.1 billion ($6 billion), up from SKr 38.4 billion ($5.3 billion) but just below most forecasts, and operating margin was 18.3 percent, better that the estimate from Nomura Securities.

Ericsson said it now expects moderate growth in 2006 in the major mobile phone technologies GSM and WCDMA, compared with a previous forecast for moderate growth for the whole mobile systems market.

_This is a reasonable set of results that indicate Ericsson is continuing to make the most of the market opportunities, commented Richard Windsor, senior analyst tracking global communications equipment at Nomura Securities.

Windsor added: "The mobile infrastructure is holding up better than we had anticipated, largely, we suspect, due to strong net adds in emerging markets."


Source: eeTimes

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