Net profit in the first three months of 2008 was to 2.7 billion kronor ($460 million), compared with 5.8 billion kronor a year ago.

Sales rose to 44 billion kronor ($7.4 billion), from 42 billion kronor in the year-ago quarter.

Ericsson reported higher costs in the quarter, related to recent acquisitions, restructuring charges and research and development investments. A 48 percent drop in profits at mobile phone joint venture Sony Ericsson also weighed on results.

However, the report was better than expected and Ericsson shares -- badly battered since a profit warning last year -- rose sharply on the Stockholm stock exchange. Ericsson shares were up 20.7 percent to 15.02 kronor in early trading.

"This was a really nice surprise," said eQ Bank analyst Jari Honko. "This shows that Ericsson is a shining star in the network industry."

Honko said Ericsson's operating profit beat the market consensus by about 16 percent. Despite Ericsson's results, he cautioned that the network infrastructure industry was in a "difficult phase."

Ericsson Chief Executive Carl-Henric Svanberg said his company "developed well in the quarter, considering the present market environment and the declining U.S. dollar."

Still, he said, Ericsson continues "to plan for a flattish development in the mobile infrastructure market" in 2008, but that the professional services market "is expected to show good growth.

Since the second half of last year, shares in the Stockholm-based company have plunged on the back of a surprise profit warning as well as turmoil in the world's financial markets.

Ericsson in February announced a cost-cutting plan that would lead to thousands of layoffs worldwide.






Source: CNN