“Group sales in the quarter increased by 14% year-over-year driven by a continued strong demand for mobile broadband. Sales were negatively impacted by the strong SEK and sales for comparable units, adjusted for currency and hedging, increased 27% year-over-year. The strong growth we have seen in the past quarters continued also this quarter,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). “Operating income, excluding joint ventures, decreased to SEK 5.0 (5.3) b. in the quarter negatively impacted by a one-off restructuring charge of SEK 1.3 b related to reduction of staff in Sweden. Net income amounted to SEK 3.2 (2.0) b., an increase of 59%.
In the quarter we saw a change in market mix where Brazil, China, Germany, Korea, and Russia showed especially strong growth both year-over-year and sequentially. The US maintained its high business activity although sequentially the networks business was somewhat slower while services continued to show good development.
Segment Networks sales grew 31% year-over-year. In addition to continued increased sales of mobile broadband, IP network product revenues showed strong development. Segment Global Services sales decreased -5% year-over-year primarily due to currency exchange rate effects. In local currencies Professional Services sales were almost flat. Managed Services sales were down compared to the second quarter 2010. The underlying fundamental growth drivers for the services business remain and customer interest is high. Segment Multimedia sales were down -2% year-over-year, however, with good traction for revenue management.
The impact from the earthquake and tsunami in Japan was limited in the second quarter due to successful mitigation activities. Our supply chain has recovered quicker than expected and lead times for our products are being gradually restored to normal levels.
The quarter was challenging for our joint ventures and both reported losses. Sony Ericsson’s profitability was impacted by the earthquake in Japan resulting in supply chain constraints of close to 1.5 million units. There is a continued strong consumer and operator demand across the smartphone portfolio.
ST-Ericsson increased its loss in the quarter mainly due to recent changes in the market demand for feature phones,” concludes Hans Vestberg.