BERLIN ? Ericsson, the biggest maker of telecom networking equipment, said on Friday that its profit had more than quadrupled in the third quarter after a year of cost-cutting, but gave a cautious prognosis for the industry?s recovery.
In an interview, the chief executive, Hans Vestberg, said the company?s joint venture with Sony making cell phones had ?turned the corner,? and that Ericsson was open to considering new acquisitions, including the possible purchase of a rival, Nokia Siemens Networks.
But overall, he warned that Ericsson and other equipment makers were still constrained by a shortage of key components for mobile broadband networks.
Nokia, the world?s largest handset maker, on Thursday also cited a shortage of cameras and display screens in announcing its results.
?We are working hard to compensate,? Mr. Vestberg said at a news conference in Stockholm, where the company is based. ?This is impacting mainly the mobile broadband equipment because that is where the demand is.?
Net profit at Ericsson rose to 3.6 billion Swedish kroner, or $542.2 million, from 800 million kroner a year earlier. Sales rose 2 percent to 47.5 billion kroner, led by North America, China and Japan. But accounting for currency fluctuations, Ericsson said sales had declined by 5 percent annually in the period.
Shares of the company?s stock rose more than 5 percent in Stockholm to 78.85 kroner.
Mr. Vestberg said the recovery has been marked by spending restraint among network operators and the ongoing parts shortage among Asian suppliers. Most operators were opting for modest upgrades to networks, he said, rather than committing to expensive new systems.
The company gave no sales or profit forecasts.
?The global mobile infrastructure market continued to decline in the first half of 2010, although at a slower pace than in 2009,? Mr. Vestberg said in a telephone interview. ?We are not out of the tunnel yet, but we may be beginning to see the light at the end of the tunnel.?
Ericsson reported the surge in profit after eliminating 15.5 billion kroner in operating expenses over the past year. Net income was helped by the recovery at Sony Ericsson, the cell phone venture with Sony, where net profit rose to ?49 million in the third quarter, compared to a ?164 million loss a year earlier.
It was the third-straight profitable quarter for Sony Ericsson after being revamped to produce fewer, but more profitable, phones, such as the touchscreen Xperia X10 and Vivaz Pro.
Sales at Sony Ericsson fell 1 percent in the quarter to ?1.6 billion as the company shipped 26 percent fewer devices, 10.4 million versus 14.1 million a year earlier.
?There has been a huge transformation at Sony Ericsson,? Mr. Vestberg said. ?It is not a huge profit but we have definitely turned the corner on Sony Ericsson.?
Asked whether Ericsson was a potential buyer for Nokia Siemens Networks, the joint venture of Nokia and Germany?s Siemens, Mr. Vestberg said: ?That?s a very good question.?
But he declined to either express an interest or rule out a potential bid.
Neither Nokia nor Siemens have publicly confirmed interest in reducing or selling their stakes in N.S.N., but analysts say that Nokia, facing intense competition from rival smartphone makers, may be looking to jettison the money-losing commitment.
?As a leader in industry, we have to look at all potentially industry-changing events,? Mr. Vestberg said, referring to the potential sale of N.S.N.
He suggested that Ericsson may look to N.S.N. not for its technology but its customer base. He referred to Ericsson?s July 2009 purchase of the carrier equipment business of Nortel, a bankrupt Canadian rival, for $1.13 billion.
The Nortel business made network equipment based on a standard called CDMA, or Code Division Multiple Access, which is predominantly used by operators in North America. Ericsson had its own CDMA equipment business, but bought Nortel?s unit anyway because it wanted access to the company?s North American customer base, Mr. Vestberg said. ?We didn?t need the CDMA equipment of Nortel but it had a very important customer footprint,? he said.
However, Mats Nystrom, an analyst at SEB Enskilda Bank in Stockholm, discounted the possibility of an Ericsson-N.S.N. deal.
?There is nothing that N.S.N. has which Ericsson would want,? Mr. Nystrom said. ?They would also probably have the competition authorities on their back. And N.S.N. is still a merger in progress with lots of issues outstanding. I don?t think it will happen.?
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