Sweden's LM Ericsson 2Q profit falls 70 pct

Ericsson, a world-leader in mobile network infrastructure, reported a profit of 1.9 billion kronor ($320 million), down sharply from 6.4 billion kronor in the same quarter last year.

Sales in the three-month period ended June 30 rose 2 percent to 48.5 billion kronor ($8.1 billion), up a tad from 47.6 billion kronor in the corresponding period in 2007.

Development costs weighed heavily on the result, rising 24 percent in the quarter from the same three months a year earlier.

Some 1.8 billion kronor ($302 million) in restructuring costs were recognized in the period as part of the company's plan to cut expenses by 4 billion kronor ($672 million) a year. The plan will lead to thousands of layoffs worldwide.

Many analysts said the result was better than expected, yet Ericsson shares dropped 8.3 percent to 66.80 kronor ($11.22) in Stockholm in an overall lower market.

Helena Nordman-Knutson, an analyst at Ohman Fondkommission, said the market likely was reacting more to Ericsson's forecast than its quarterly results.

The Stockholm-based company maintained its outlook for the industry, saying it expects a "flattish" market in 2008.

Nordman-Knutson also noted that the share price had climbed in recent days. "It's increased some 10 percent ahead of the report," she said.

Sydbank analyst Jacob Pedersen said Ericsson's bottom-line figures actually looked "quite good" at a first glance.