Swedish wireless equipment maker Ericsson says Q4 profits tumbled amid margin squeeze

STOCKHOLM – LM Ericsson, the world-leading wireless equipment maker in terms of market share, on Wednesday posted a much worse-than-expected fourth-quarterly result, mainly blaming operators for turning cautious due to the financial turmoil in Europe.

The company, headquartered in Stockholm in Sweden, said its profits in the final quarter of 2011 fell by more than two-thirds compared with a year earlier, reaching only 1.15 billion kronor ($170 million) from a previous 4.32 billion kronor.

Although sales were more or less flat in the October-December period, rising by 1 per cent to 63.67 billion kronor, the tighter budgets for its operators led to a severe squeeze of its gross margin, which fell to 30.2 per cent from a previous 34.7 per cent.

Losses in its Sony Ericsson joint venture also hurt the results.

Ericsson last year sold its share in Sony Ericsson to Sony, but the deal is being finalized in this quarter.

Greger Johansson, an analyst with research firm Redeye called the results “very weak,” saying that lower sales within Ericsson’s core unit Networks were especially disappointing.