Service providers may be feeling a bit more optimistic about 2010, but that's been of little consolation to Ericsson (NasdaqGS: ERIC) whose net first-quarter profit slumped 26 percent due to weak sales in emerging markets.
Ericsson's first quarter was a story of ups and downs. During the quarter, net profit was $174.4 million, down from $238.8 million in Q1 2009. Company sales also were down 9 percent--similar to competitor Nokia Siemens Networks' Q1 results reported late last week--declined from $6.88 billion in Q1 2009 to $6.26 billion. On a slightly more positive note, Ericsson's gross margin rose to 39 percent.
One major factor that impacted Ericsson's Q1 results was that many emerging market service providers kept a tight rein on their spending in Q1. However, Ericsson said it is seeing strong growth in the North American market.
And although equipment sales were down, Ericsson is seeing its global services segment grow. During the quarter, Global Services grew three percent year-over-year. At the same time, managed services increased 17 percent year-over-year, which was likely the result of 16 new managed services contracts it signed during the quarter.
For more:
- see the release here
- FT has this article
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