Ericsson sees pressure on sales as profits undershoot

STOCKHOLM (Reuters) - Mobile telecom gear maker Ericsson on Thursday reported third-quarter operating profit below expectations as its core networks business had its slowest growth in a year.

Earnings before interest and tax were 4.2 billion crowns (406 million pounds) compared to 3.1 billion in the year-ago quarter, including the company's joint ventures, missing a mean forecast of 4.5 billion in a Reuters poll of analysts.

Sales at Ericsson, the world number one mobile network equipment maker, were 53.0 billion crowns against a forecast of 55.1 billion, and lower than the year-ago 54.6 billion.

"We are currently seeing sales coming under some pressure," CEO Hans Vestberg said, blaming reduced activity in Japan and the maturing of two big projects in the United States.

Sales at Ericsson's networks business, which accounts for slightly more than half of revenue, increased by 4 percent year-on-year, adjusted for currency swings. That was the lowest growth figure in a year, and well below the 7 to 9 percent seen in the three previous quarters.

The gross margin was 32.0 percent against a forecast of 32.9 percent.

The company's shares fell sharply following the second quarter, when profits fell far below expectations. After that fall, they have outperformed the STOXX Europe 600 Technology index rising around 11 percent versus a 7 percent rise for the sector, supported by signals of higher spending ahead from telecom operators.

Notably, Britain's Vodafone has said it will boost spending by 6 billion pounds ($9.70 billion) over three years, a move analysts expect other operators to follow.

Link to full report: http://r.reuters.com/bed24v

(Reporting by Sven Nordenstam. Editing by Jane Merriman)