By Juhana Rossi
Sweden's Ericsson AB on Tuesday reported a weaker-than-expected
fourth-quarter net profit and said sales growth had stalled, after
Norther American network operators curbed investment in new
high-speed wireless networks.
The telecom-equipment maker said sales in North America dropped
5% in the October-to-December quarter, compared with the prior-year
period, as major U.S. network operators shifted spending from
infrastructure to acquisitions and spectrum auctions.
Net sales for the period came in at 67.99 billion Swedish kronor
($8.2 billion), up 1% from 67.03 billion kronor in the same period
last year. Weak sales in North America were partially offset by
robust sales growth in many markets in the Middle East, Europe and
Asia.
Ericsson reported a net profit of 4.22 billion kronor, or 1.29
kronor a share, for the fourth quarter, below analysts' forecast of
a median 4.56 billion kronor, or 1.39 kronor a share. In the same
period last year Ericsson's reported a net profit of 6.41 billion
kronor, boosted by a one-time gain of 3.3 billion kronor from a
licensing agreement with Samsung Electronics Co.
North America has traditionally been Ericsson's biggest market,
accounting for 19.2% of the company's total revenue in the fourth
quarter.
Even though consumer demand and mobile-data traffic remains
strong in North America, Ericsson expects mobile-broadband business
to remain slow there in the short-term, Chief Executive Hans
Vestberg said in a statement.
Ericsson's gross margin, a closely watched measure of its
performance, came in at 36.6%, beating comfortably the median
forecast of 34.5%, according o a poll by Reuters. The margin
improvement stemmed largely from higher software sales and
efficiency improvements.
The company also benefited from the dollar's appreciation
against the Swedish krona even though it realized a one-time
currency hedging loss of 800 kronor during the quarter.
Ericsson's is proposing a dividend of 3.40 kronor a share for
2014, up 13% from 2013's 3 kronor a share payout.
Write to Juhana Rossi at juhana.rossi@wsj.com
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