Ericsson reveals record Q4, but below forecast

STOCKHOLM: Ericsson, the world's largest supplier of mobile phone network equipment, said on Tuesday its fourth-quarter pretax profit rose 16 percent to 10.1 billion crowns ($1.32 billion), just below forecast.

The average of forecasts in a Reuters poll was for pretax profit of 10.4 billion crowns after 8.7 billion in the fourth quarter of 2004 and 8.0 billion in the third quarter of 2005.

But fourth-quarter 2005 sales came in above expectations at 45.7 billion crowns versus a forecast 43.8 billion crowns.

Gross margin was 44.2 percent, versus a forecast 45.3 percent, and down from the third quarter's 45.6 percent, which Ericsson said was due to the rising share of services, where it manages operators' networks, within its business.

"The traffic growth in the world's mobile networks is expected to continue as a result of both new services and new subscribers," the company said in a statement.

"For 2006 we continue to believe that the global mobile systems market, measured in U.S. dollars, will show moderate growth compared to 2005," it added.

Chief Executive Carl-Henric Svanberg said Ericsson continued to gain on its competitors and, speaking to Swedish radio, estimated overall market share at 35 percent.

For full-year 2005, pretax profit rose to 33.3 billion crowns from 26.2 billion.

Analysts expected a muted share reaction to the figures.

"I think the share price will open unchanged or dip somewhat due to the fact that both the gross and operating margin were lower than expected," said Redeye analyst Greger Johansson.

"I don't think it is enough that sales were higher than expected," he added.

On the Instinet electronic brokerage, Ericsson slipped 1.8 percent to 26.7 crowns after the earnings report.