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Apr. 28, 2008

Wireless equipment manufacturer Ericsson reports a steep 55 percent drop in its first quarter profit.

Surprisingly, Ericsson's stock was up more than 25 percent on the news Friday.

Overall, net profit for the first quarter was $460 million, compared with $970 million for the same 2007 period.

Ericsson's sales grew to $7.4 billion, from $7.03 billion for the corresponding 2007 period.

The network equipment manufacturer said its costs were higher this quarter due to recent acquisitions, restructuring charges and investments in R&D.

Ericsson also said that lower profits at its joint handset venture with Sony also affected the company’s bottom line.

It also warned that it could possibly impact its second quarter as well, albeit not as much as its first quarter.

Ericsson CEO Carl-Henric Svanberg said in a company statement “our business developed well in the quarter, considering the present market environment and the declining U.S. dollar.”

“Nevertheless, we still find it prudent to plan for a flat mobile infrastructure market for all of this year,” he added.

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Source: Ericsson.