Ericsson’s share price down, third-quarter sales surpass analysts’ estimates on strong phone carriers’ spending

The biggest wireless networks maker in the world, Ericsson, made an official statement today that its sales over the third quarter of the fiscal year rose, which surpassed analysts projections, as phone carriers invested in networks in order to improve their signal.

The company said in a statement, cited by Reuters: “We are executing on 4G/LTE contracts in Mainland China and Taiwan and improving sales in Japan. Furthermore, the investment climate in India continues to improve.”

According to the companys statement, its sales over the third quarter increased by 8.7% to reach SEK 57.6 billion ($7.9 billion). This result was better than the initial analysts projections pointing to SEK 54.8 billion. Ericsson also reported that its profit over the period fell by 9.4% due to larger expenses.

The company stated that the year-on-year improvement in its revenue was mainly a result of stronger sales in the regions of the Middle East, Russia and China. Ericssons sales also increased in India, where “the investment climate continues to improve” according to the companys Chief Executive Officer, Hans Vestberg.

Ericsson also said that its gross margin was in line with initial forecasts. It increased from 32% a year ago to 35.2% over the reported quarter. The companys operating profit declined from SEK 4.2 billion in the same period a year earlier to SEK 3.9 billion.

Ericssons net income over the quarter fell from SEK 2.92 billion a year ago to SEK 2.65 billion.

Mikko Ervasti, an analyst at Evli Bank Oyj, commented on the companys results for Bloomberg: “Ericsson is selling a lot of LTE into China and they tend to be good for sales but higher-cost as well.”

Ericsson lost 1.17% to trade at SEK 84.55 per share by 9:45 GMT, marking a one-year increase of 6.02%. The company is valued at SEK 281.80 billion. According to the Financial Times, the 29 analysts offering 12 month price targets for Ericsson have a median target of SEK 93.00, with a high estimate of SEK 117.00 and a low estimate of SEK 74.00. The median estimate represents a 8.71% increase from the last price of SEK 85.55.