Ericsson shares up jump 25 percent on 1Q report

Net profit in the first three months of 2008 was to 2.7 billion kronor ($460 million), compared with 5.8 billion kronor a year ago.

Sales rose to 44 billion kronor ($7.4 billion), from 42 billion kronor in the year-ago quarter.

Ericsson reported higher costs in the quarter, related to recent acquisitions, restructuring charges and research and development investments. A 48 percent drop in profits at mobile phone joint venture Sony Ericsson also weighed on results.

Ericsson's shares that have been battered since a profit warning last year rose sharply to 15.64 kronor ($2.65) in midday trading.

"This was a really nice surprise," said eQ Bank analyst Jari Honko. "This shows that Ericsson is a shining star in the network industry."

Honko said Ericsson's operating profit beat the market consensus by about 16 percent. Despite Ericsson's results, he cautioned that the network infrastructure industry was in a "difficult phase."

Ericsson Chief Executive Carl-Henric Svanberg said his company "developed well in the quarter, considering the present market environment and the declining U.S. dollar."

A weak dollar makes exports more expensive.

Still, he said, Ericsson continues "to plan for a flattish development in the mobile infrastructure market" in 2008, but that the professional services market "is expected to show good growth.