STOCKHOLM: Telecoms gear maker Ericsson blasted past first-quarter core profit expectations thanks to surging mobile broadband sales but said it would take until the third quarter to resolve Japan quake supply problems.
Ericsson's shares jumped more than 10 percent to their highest since last July, as sales soared on the back of a recovering tech gear market and cost cuts offset currency headwinds and margin pressure from competition.
Ericsson said growth had been particularly strong in the United States, India, Japan, Korea, Russia and China.
The only area of concern was the effect of March's earthquake in Japan. While it had no impact on the first quarter, Ericsson said it would be toward the end of September before supply chain problems had been fully dealt with.
"It was an extremely strong report. The network side is coming through fantastically and the whole of Ericsson is getting (sales) growth of 17 percent now," said Greger Johansson, analyst at Redeye. "Even the gross margin and, as a consequence, the profit is better than expected."
Ericsson's shares were up 10.1 percent to 88.60 crowns at 1326 GMT, easily outpacing a slight rise in both the Stockholm blue-chip market and European tech stocks.
The company said it had taken measures to meet a component shortage following March's earthquake in Japan but there would be some impact.
"We have done a lot of mitigating actions everything from redesign, second source, even buying from spot markets," CEO Hans Vestberg said.
"However, our best estimate right now is that certain products will have a delay. We believe that by the end of the third quarter we will be back to normal."
He would not say which products were affected and what the impact on the coming quarters would be.
Nokia 50 percent parent to Ericsson rival Nokia Siemens Networks said last week it expected the worst effects from supply chain problems in the second quarter.
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