Ericsson Q1 core profit weak, recession yet to bite

Simon Johnson

STOCKHOLM (Reuters) - Telecom gear maker Ericsson posted weaker-than-expected underlying earnings on Thursday but said the effect of the global downturn on the mobile network market remained limited.

The world's top mobile equipment maker reported quarterly net earnings above forecasts, due to financial items, but core operating profit lagged at 1.8 billion Swedish crowns ($222.8 million) versus 2.0 billion seen by analysts in a Reuters poll.

Sales were 49.6 billion crowns against an expected 50.2 billion.

"The underlying result is worse than expected with slightly weaker margins and growth if you adjust for currency," Michael Andersson, analyst at Evli said.

He said expectations had been high after a strong fourth quarter.

"It's not a disaster-report -- overall it looks stable -- but I do think the market will want more information on Ericsson's view of the markets and where growth is heading."

The global recession has slammed most industries although the telecoms sector has been less affected.

Ericsson remained relatively upbeat.