Ericsson 1st quarter 2006 down

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Ericsson first-quarter earnings fell just below expectations for the first time in more than two years as the company absorbed integration costs after buying Marconi Corp.’s assets for $2.1 billion last October.

Ericsson reported first-quarter net income of $609 million from revenues of $5.2 billion, down from a year go when Ericsson posted net income of $615 million based on sales of $4.2 billion.

Ericsson noted that sales in the quarter were up 24 percent compared to the same period a year ago. The company reported that its North American sales rose 58 percent, driven by successful third-generation launches in the United States. In Asia-Pacific, sales were up 44 percent, but in Latin America, growth was held to only 3 percent, which Ericsson attributed to recent network rollouts, saying that business is expected to pick up later this year as plans for W-CDMA take shape.

Analysts had expected net income of $701 million from revenues of $5.1 billion. However, Ericsson said the former Marconi operations generated an operating loss of $79 million, including $52.9 million in restructuring charges. In addition, Ericsson said that its operating margin, “decreased year-over-year from 21 percent to 16.9 percent, primarily due to effects from new contracts with an increased proportion of network rollouts and initial phases of large-scale services contracts.”

News of the earnings pushed Ericsson’s stock down $2.38 to $35.60 per share during mid-day trading on the Nasdaq.