STOCKHOLM, Sweden-L.M. Ericsson’s net sales grew 8 percent during the first quarter while income before taxes and income per share fell by 51 percent and 47 percent respectively.
The company attributed the decline in its income to lower profitability in the consumer products sector, restructuring costs, additional provisions for market risks and customer financing, as well as higher operating expenses.
Sales for the company’s Network Operators and Service Providers segment increased 20 percent to about $3.5 billion, while its Enterprise Solutions sales were flat at $444.1 million. Sales for consumer products declined 12 percent to $1.2 billion.
In the Network Operators and Service Providers Segment, which Ericsson said represents about 70 percent of its total sales, strong mobile system sales offset a decrease in wireless systems sales and low sales for data networking, said the company. Mobile systems account for about 75 percent of the segment’s total sales.
In the consumer products segment, Ericsson said a continued shift toward mid- and entry-level phones had a negative impact on its sales for the first quarter, although volume increased 37 percent.
China represented Ericsson’s largest market, followed by the United States, the United Kingdom, Brazil and Italy. Sales to the Europe, Middle East and Africa increased 13 percent and sales to Asia increased 16 percent. Sales in Latin America and North America decreased by 12 percent and 4 percent respectively.
The company said it expects income per share for the year to be lower than in 1998 because of financial uncertainty in several markets, increased costs for research and development, acquisitions, the Y2K issue, IS/IT support and lower profitability for some products, as well as extraordinary charges for restructuring.
