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Ericsson profits down 72% on weak demand

By Andrew Ward in Stockholm

Published: October 22 2009 12:23 | Last updated: October 22 2009 12:23

Shares in Ericsson fell nearly 7 per cent yesterday after the world’s biggest maker of wireless network equipment revealed a bigger-than-expected drop in third quarter earnings.

Net profits were down 72 per cent from last year as mobile operatorscut back on capital expenditure.

Carl-Henric Svanberg, chief executive, said there were signs of improvement in many of Ericsson’s biggest markets but there would be a time lag before the company felt the benefits.

“What we are seeing right now is the new projects that were planned nine months or a year ago when the financial crisis was much tougher,” he said. “Now everyone understands weare moving to safer territory but it takes time for operators to plan.”

The disappointing results came a week after Nokia, the mobile phone maker, announced a €908m ($1.4bn) writedown at its troubled network equipment joint venture, Nokia-Siemens Networks.

Hans Vestberg, chief financial officer, said Ericsson’s market share had held steady during the third quarter. Nokia, in contrast,acknowledged that NSN was losing ground to rivals. But both groups are facing mounting competition from Chinese upstarts such as Huawei as well as more traditional foes such as Alcatel-Lucent.

Mr Vestberg, who is replacing Mr Svanberg as chief executive in January, said the transition to third generation phone services in China was gathering pace but 3G-related business was not yet fully offsetting thedecline in 2G revenues.

Emerging markets in eastern Europe, Africa and Latin America were another source of weakness as debt-laden operators struggle to secure credit for new infrastructure.

Ericsson has faced additional pressure from problems at Sony-Ericsson and ST Ericsson, its struggling mobile phone and semiconductor joint-ventures.

But Mr Vestberg pointed to a slowdown in losses atboth units during the second quarter as evidence the worst was over after recent management changes.

Third quarter revenues fell 6 per cent from last year to SKr46.4bn, while net profits were SKr810m, down from SKr2.84bn. The stock fell 6.8 per cent to SKr68.9.

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Nokia sues Apple over iPhone patents

By Andrew Ward in Stockholm and David Gelles in San Francisco

Published: October 22 2009 16:22 | Last updated: October 22 2009 21:21

Nokia, the world’s biggest mobile-phone maker, on Thursday launched a legal challenge against alleged intellectual property abuse by Apple, opening a new front in its battle againsta US rival that is transforming the industry.

A lawsuit filed in a US federal court in Delaware accused Apple of infringing 10 Nokia patents in all 30m of its flagship iPhones sold since the US company entered the mobile market in 2007.

The move sets the stage for a court battle between the industry leader and its fastest-growing challenger over one of the hottest products in consumertechnology.

Ilkka Rahnasto, Nokia’s head of legal affairs and intellectual property, accused Apple of seeking “a free ride on the back of Nokia’s innovation”.

The dispute comes as Nokia attempts a fightback against Apple in the rapidly expanding smartphone market as consumers shift from traditional handsets to phones that double as mini-computers. Nokia remains the biggest maker of smartphones,which offer services such as e-mail, music and video, but is losing market share to the iPhone and the BlackBerry range of devices made by Canada’s Research in Motion.

Their contrasting fortunes were highlighted this week when Apple announced a 47 per cent jump in third-quarter profits days after Nokia said it had fallen into loss.

Nokia said the disputed patents involved technologies that...
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