Mobile equipment giant Ericsson blamed the global economic situation and restructuring charges for a 61 percent decline in net profit in the second quarter. “The effects of the global economic climate on the mobile infrastructure market are now more notable, especially in markets with currencies under pressure and a tougher credit environment,” said Chief Executive Carl-Henric Svanberg. Net profit fell to SEK831 million (US$111 million) from SEK1.90 billion in the year earlier quarter, while sales increased 7 percent to SEK52.14 billion. According to Dow Jones Newswires, the results were below analysts’ expectations of net income of SEK1.58 billion and sales of SEK53.62 billion. Profit was hit by restructuring charges of SEK3.6 billion and losses of EUR213 million at Sony Ericsson, its handset joint-venture with Japan’s Sony, and US$213 million at ST-Ericsson, its semiconductor joint-venture with STMicroelectronics.

Svanberg noted that services now represents 38 percent of sales at the vendor. “Our leading position was confirmed by our first managed services contract in Africa with Zain and the network services contract with Sprint in the US. In the present economic climate, where operators focus on efficiency and cost reductions, Ericsson is benefiting from its sizeable services operation with both scale and global presence.” The company reiterated its plan to reduce costs by SEK10 billion from the second half of 2010.