Ericsson reported a sharp drop in profits for the fourth quarter, hurt by losses at its joint ventures and weak sales growth. Net profit tumbled to SEK 1.5 billion from SEK 4.4 billion a year earlier, as its share of losses from Sony Ericsson and ST-Ericsson swelled to SEK 1.9 billion. Net sales were up just 1 percent year-on-year and 15 percent from Q3 to SEK 63.7 billion. The main Networks division posted sales down 9 percent from a year ago to SEK 33.3 billion. Ericsson said business slowed mainly in North America and Russia, while other areas also saw operators turn cautious due to weak economic growth and political unrest. The Global Services unit grew sales 18 percent to SEK 27.0 billion, but its operating margin more than halved to 6 percent due to a continued high proportion of network upgrade contracts in Europe. These low-margin projects are expected to impact results in next few quarters as well. Overall Ericsson's quarterly operating profit, excluding JVs, fell 52 percent year-on-year to SEK 4.1 billion. Despite the weaker Q4 results, Ericsson still grew over the full year, and the company increased its dividend to SEK 2.50 per share from SEK 2.25. The group finished the year with SEK 80.5 billion in cash and short-term investments. Ericsson said it expects operators to remain cautious on spending in the short term. In the mean time it will continue to focus on winning more coverage and network modernization projects than capacity projects.
