Cost cuts boosted first-quarter gross margin at Ericsson above its own forecasts, the Swedish telecoms equipment maker says.
The world's biggest maker of wireless network components said today the margin, the widest measures of how a company manages costs in relation to sales, would be higher than the 41.6 per cent seen in the fourth quarter, despite a slowdown in sales.
Sales traditionally drop at the start of the year compared with the usually strong fourth quarter when telecoms operators spend leftovers from their annual budgets.
"The main reason for the improvement is better than anticipated benefits of cost of sales reduction activities," Ericsson said in a statement.
In February Ericsson had said the margin could deteriorate slightly.
The company reiterated in the statement that revenues would rise moderately year-on-year but decline against the seasonally strong October-December period. In February Ericsson quantified the moderate year-on-year growth as a 5-10 per cent increase.
"The sales outlook for the first quarter remains unchanged," the statement said.
The news sent shares in Ericsson up nearly 10 per cent on a positive Stockholm market. The news also boosted French competitor Alcatel, which has also undergone extensive restructuring, by 3.3 per cent.
Since the start of the year Ericsson has outperformed the DJ Stoxx Technology index by 48 per cent.
Shares in Nokia, the world's biggest producer of mobile phones, marginally in the red before the news, rose to trade two per cent firmer. Only 20 per cent of the Finnish firm's revenues are generated by mobile networks, competing with Ericsson's core business.