Ericsson posts 360% increase in Q3 profits; shares soar

Swedish wireless-network provider Ericsson on Friday announced third-quarter profits of $542 million as the company enjoyed strong North American sales.

The earnings results by early Friday afternoon propelled shares of Ericsson (NASDAQ: ERIC) as high as 77 cents, or 7 percent, above Thursday's closing price of 10.77.

Ericsson reported third-quarter sales of 47.48 billion kronor from 46.43 billion kronor in last year's Q3, slightly short of estimates calling for revenue of 47.73 billion kronor.

But the company said its performance in Q3 was hampered by a shortage of components, which it estimated cost from 2 billion to 3 billion kronor in lost revenue.

In a statement, CEO Hans Vestberg said, "A key priority has been to mitigate the effects of industry-wide component shortages. The situation has gradually improved during the quarter but it remains a challenge to fully meet the demand for mobile broadband."

Q3 sales in North America more than tripled from a year ago to 12.9 billion kronor from 4 billion kronor, as Ericsson rode increasing demand for mobile broadband.

Ericsson, the largest manufacturer of mobile network equipment in the world, reported improving its Q3 gross margin to 39 percent from last year's 36 percent, though it was flat relative to this year's second quarter. The company's operating profit rose to 5.21 billion kronor from 1.14 billion kronor, short of estimates of 5.56 billion kronor.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.