Ericsson reported first-quarter sales down 4 percent from a year earlier to SEK 51.0 billion. Sales of network equipment dropped 18 percent to SEK 27.3 billion, due to a drop in CDMA sales on the transition to LTE and cautious spending at customers in Europe, the Middle East and India amid difficult political or economic climates, Ericsson said. The weaker orders were offset by the acquisition of Telcordia and a strong services business, where revenues rose 18 percent to SEK 20.6 billion. Operating profit, excluding the joint venture stakes and the sale of its share in Sony Ericsson, fell to SEK 2.8 billion from SEK 6.3 billion a year ago, and the EBITA margin nearly halved to 7.7 percent from 14.1. Ericsson said the gross margin was under pressure as expected, as part of its strategy to take more upgrade contracts in Europe in order to win market share. This trend is expected to continue in the short term. Net profit rose to SEK 8.8 billion or SEK 2.76 per share, from SEK 4.1 billion or SEK 1.27 per share, thanks to the gain on the sale of its share in Sony Ericsson to Sony. After positive operating cash flow of SEK 0.7 billion in the quarter, Ericsson finished March with SEK 75.6 billion.
