Flat Eric

23 April 2015 By George Hay Follow @gfhay

Shares in the Swedish telecoms kit maker fell 8 pct after margins in its networks arm missed expectations. Ericsson’s issues, including sluggish North American growth, aren’t surprising. But rival Nokia’s tie-up with Alcatel should focus minds on whether it also needs a deal.

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Ericsson shares fell sharply on April 23 after the Swedish maker of telecoms equipment reported a 19 percent year-on-year fall in first-quarter operating income, from 2.6 billion Swedish crowns to 2.1 billion crowns.

Despite a 13 percent increase in net sales to 53.5 billion crowns, the group’s overall gross margin fell from 36.5 percent in the first quarter of 2014 to 35.4 percent, while operating margins fell from 5.5 percent to 4 percent. In Networks, Ericsson’s biggest business by sales, operating margins fell from 10 percent to 2 percent.

The company said it expected the fast pace of 4G deployments in mainland China to continue and the North American mobile broadband business to remain slow in the short term.

As of 1245 BST, Ericsson shares were trading at 98 crowns, down 11.4 percent.

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