3G Hurts Ericsson Profits

Mobile phone network giant Ericsson reported first-quarter earnings and profitability below expectations on Friday due to costs from its takeover of Marconi and the start up of new contracts.

It hinted at further pressure on profitability as it takes on new business in a market for equipment for GSM and high-speed 3G phone networks where it said the long-term growth drivers of new subscriber additions were still in place.

Ericsson shares opened down 2.4 percent at 28 crowns.

The group reported pretax profit of 6.7 billion crowns ($888 million), below the average of forecasts in a Reuters poll of 7.5 billion crowns and flat on the first quarter of 2005. It was a drop of 34 percent from the fourth quarter of 2005.

Ericsson’s report, with sales of mobile network equipment growing 14 percent year-on-year, came a day after Nokia reported first-quarter network sales growth of 19 percent to 1.7 billion euros.

Analysts said the Ericsson figures were slightly disappointing. [3G!]

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