Ericsson sees China growth, slow U.S. as first-quarter profit lags

Ericsson's flag is seen at the company's headquarters in Stockholm March 11, 2015. REUTERS/Jonas …

STOCKHOLM (Reuters) - Mobile telecom equipment maker Ericsson said it expected sales in its key North American market to stay sluggish while China would see continued network rollouts as it posted first-quarter operating profit below expectations on Thursday.
Ericsson said surging data traffic would mean a further need for upgrades of networks in North America, where rollouts of the latest generation of 4G/LTE networks are largely done and spending at telecom operators has shifted to capacity upgrades.
"However, with current visibility, we anticipate 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," Ericsson said in a statement.
Profits where weighed down by a larger share of lower-margin network rollouts in China while the share of more profitable software-based capacity upgrades in North America declined.
Operating profit was 2.1 billion Swedish crowns ($A 311 million) compared to 2.6 billion in the year-ago quarter and below a mean forecast of 3.3 billion crowns in a Reuters poll of analysts.

Revenue at its networks unit, which accounts for just over half of its sales, fell 9 percent on a like-for-like basis after a 7 percent drop in the fourth quarter.

Sales at Ericsson, the world number one mobile network equipment maker, were 53.5 billion crowns, in line with a forecast of 53.2 billion. The gross margin was 35.4 percent against a mean forecast of 37.1 percent.

(Reporting by Sven Nordenstam and Olof Swahnberg; editing Alistair Scrutton)

Culled from Reuters