Don't get too excited

25 April 2008 By Una Galani Follow @ugalani

Investors had low hopes for the Swedish telecom equipment maker s Q1. Ericsson beat expectations, and the shares have jumped. Yet they re still worth half what they were before last year s profitwarning, and there are plenty of reasons for caution.

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Ericsson on Friday reported a better than expected firstquarter, delivering the company's first good news since a profitwarning last year. The Swedish telecom equipment maker's shares opened up 20%. Click here for a share price chart.

Sales increased 5% to Skr44.2bn compared to the same quarter last year. Yet margins were lower due to high network rollouts. Ericsson reported first quarter operating margin of 9.7%, against 19.3% a year earlier.

Chief executive CarlHenric Svanberg kept guidance unchanged, saying: We still find it prudent to plan for a flattish mobile infrastructure market in 2008.

In February, Ericsson announced a Skr4bn costsaving plan that would lead to 5,000 job cuts worldwide.

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