April 30, 2009, 9:34 AM — The effects of the economic downturn have so far had a limited effect on mobile networks, but some operators are postponing investments, according to Ericsson, which reported an increase in revenue for the first quarter on Thursday.
Ericsson reported sales for the first quarter of 49.6 billion Swedish kronor (US$6.2 billion), a 12 percent increase compared to the same period last year. Net income was 1.8 billion Swedish kronor, 30 percent lower than the 2.6 billion Swedish kronor the company reported in the first quarter last year.
Profit took a hit because of a significant drop in Ericsson's earnings from its share in joint venture Sony Ericsson Mobile Communications, the company said. On April 17 Sony Ericsson reported a €293 million (US$390 million) loss for the first quarter, compared to a €133 million profit a year earlier.
Yesterday, ST-Ericsson, a new joint venture between STMicroelectronics and Ericsson that began business on Feb. 2 reported a net loss of US$89 million for its first two months of operation.
What the future looks like in the mobile sector, and how operators will act going forward, is difficult to predict, according to Ericsson. However, most operators have healthy finances, and there is strong growth in traffic, Ericsson said.
Just like everyone else in the telecom sector, Ericsson is cutting costs. Its goal to reach annual savings of 10 billion Swedish kronor from the second half of 2010 is going according to plan, it said.