Ericsson saw its net profit more than halve in the second quarter, due to a poor product mix and slower demand from key markets. The company reported a profit of SEK 1.2 billion, down from SEK 3.2 billion a year ago, hurt also by bigger losses at the joint venture ST-Ericsson. Revenues rose 1 percent from a year earlier to SEK 55.3 billion. The Networks business posted sales down 17 percent to SEK 27.8 billion, due to the expected drop in CDMA sales as well as slower orders in Russia and China. This was offset by 26 percent growth in sales from Global Services to SEK 24.1 billion. Profitability was affected by a higher proportion of coverage projects rather than capacity projects, a trend which is expected to continue in the near term. The negative gross margin impact from a large number of network modernization projects in Europe will start to gradually decline from the end of 2012, Ericsson said. Going forward, it sees an increasing customer focus on network performance and quality of service, which should lead to further equipment contracts.
