Swedish telecom gear manufacturer, Ericsson announced its financial performance for the quarter ended September 30, 2009 witnessing a slump of 71 % in net profit at $ 118.2 million or 810 million Swedish kronor as compared to 2.84 billion kronor recorded a year ago.

The drop in profit was mainly brought about by cost cutting programme initiated by the company in January accounting to as much as 2.7 billion kronor. Profit was also pulled down by loss reported from JV companies Sony Ericsson (loss of one billion kronor) and ST-Ericsson (loss of $ 201 million kronor).

Meanwhile revenues for the quarter under consideration fell 6 % from 49.2 billion kronor to 46.43 billion kronor while on a sequential basis the revenues dipped by 11 %.

Core margins of the firm are still observed to be strong. Operating margin excluding restructuring charges and shares in JV increased from 11.5 % to 11.7%.

EPS dipped to 0.25 kronor from 0.89 kronor.

Ericsson has initiated the cost cutting measures with an aim to annually save 6 billion to 7 billion by second half of 2010.

“Sales of network equipment declined due to lower demand in the current tougher market environment. Despite lower volumes, Network margins remain stable. The strong development in Professional Services continued," said Carl-Henric Svanberg, President and CEO of Ericsson.

The company is now banking on demand for networks to support mobile broadband services which includes demand for WCDMA solutions as well as expansion of conventional wireless network from incumbent operators especially in developing markets like India.

India in fact turned out to be the most contributing market for the company.

On a sequential basis sales from Asia-Pacific market declined from 17.4 billion kronor to 15.3 billion kronor but on a yoy basis it is seen increasing from 14.1 billion kronor.