Ericsson reported a sharp fall in third-quarter profits, as operators remained cautious on network equipment spending. The company's sales dropped 2 percent from a year earlier to SEK 54.6 billion, with 19 percent growth in services unable to offset a 17 percent fall in sales of network equipment. Ericsson said network sales were weaker in parts of Europe, China, Korea and Russia as well as continuing lower in the CDMA segment. This was partly offset by strong development in North America. The operating margin nearly halved compared to a year ago to 6.7 percent, hurt by more coverage rather than capacity projects, and net profit fell to SEK 2.2 billion from SEK 3.8 billion a year ago, impacted also by losses at ST-Ericsson. CEO Hans Vestberg said profitability was "not satisfactory", and the company will continue to look for efficiency gains and cost reductions to improve results. Cash flow from operations improved significantly still, to SEK 7.0 billion from SEK 1.6 billion a year ago.
