Ericsson reported second-quarter sales down 1 percent year-on-year to SEK 54.8 billion. Its Networks business grew 3 percent to SEK 29.0 billion, while services declined 7 percent to SEK 23.1 billion. The gross margin rose to 36.4 percent from 32.4 a year ago, helped by more capacity contracts and fewer network roll-outs, increased revenues from intellectual property and lower restructuring charges. This also helped operating profit, which despite higher R&D spending, rose 62 percent year-on-year to SEK 4.0 billion. Net profit was up 76 percent to SEK 2.7 billion.
Ericsson said recent key contract wins will help revenues and profits improve gradually in the second half of the year. It also expects its modem business to start contributing to sales by year-end. A tier-one smartphone maker is already working on integration with the M7450 modem, and devices running the modem will be on the market before the end of 2014.
