Ericsson, the world's largest telecoms equipment maker, posted stronger than expected first-quarter earnings on Friday, adding to optimism in the tech sector after Nokia also surprised positively the day before. But the Swedish company, whose base stations and other equipment allow operators to provide GSM and 3G-standard mobile phone services, stuck to a cautious forecast of slight growth for mobile systems this year.
It also said it was unlikely to maintain a 21 percent first-quarter operating margin - operating profit as a percentage of sales - but hoped to take market share from rivals.
The company said the first quarter gained from the deployment of new third-generation (3G) systems and upgrades of older GSM networks in western Europe, where sales rose 26 percent.
Analysts had expected strong orders in the last quarter of 2004 to boost turnover early in 2005. Emerging markets also continued to see solid demand and Ericsson expected China to see a substantial pick-up in sales in the second quarter.
"We did strengthen market share. External estimates say it was between 2 and 3 percent... We are clearly making headway there," said Chief Executive Carl-Henric Svanberg.
The company sacked half its workforce of over 100,000 after the dotcom boom turned to bust, and turned itself around to report the first annual profit for three years in 2004.
For the first quarter of 2005, pretax profit was 6.7 billion Swedish crowns ($952 million) versus the average forecast in a Reuters poll of 6.1 billion crowns and 3.7 billion a year ago.
The gross margin rose to 48.5 percent against a forecast 44.8 percent and a figure of 44.7 percent a year earlier. This boosted investor confidence after fourth-quarter margins had disappointed.