Swedish telecom giant posts profit well below analysts expectations. 

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Sweden’s Ericsson AB, the world’s largest maker of wireless networks, Friday posted a rise in second quarter net profit – but the result missed market expectations as global network sales declined, disappointing investors and its shares dropped.

“The conditions we saw in the second half of 2009 with mixed operator investment behavior prevailed also in the first half of this year,” Chief Executive Officer Hans Vestberg said in the statement. “In the quarter, all regions except North America showed lower year-over-year sales.”

The company blamed the plunge in sales on shortages in industry components and on bottlenecks in the supply chain.

In the three months to June, Ericsson raised net profit from the equivalent figure last year by 126 percent to 1.88 billion kronor (200 million euros, 258 million dollars).

But sales fell by 8.0 percent to 48.0 billion kronor, the group said, saying that sales had been held back by shortages of supplies and because customers were delaying orders.

Analysts, as polled by Dow Jones Newswires, had expected a net profit of 2.73 billion kronor and sales of 49.8 billion kronor. The price of shares in the company fell immediately by 5.5 percent to 84.0 kronor. The overall market here showed a fall of 0.7 percent.

Along with its competitors, Ericsson has suffered from weak demand in several markets in the past year as operators cut investment.

In the second quarter, sales on a 12-month comparison had fallen in all regions except in North America. However, by comparison with sales in the first quarter, the picture was less clear with sales picking up in North America, northern Europe and in Mediterranean countries.

 Looking ahead, Vestberg said the company aims to grow faster than the market.

Nokia Siemens Networks said on Monday it would buy wireless network infrastructure assets from the US firm Motorola for 1.2 billion US dollars (926 million euros), stepping up competition with Ericsson. After the acquisition the Finnish-German firm will become the world’s second biggest wireless equipment maker after Ericsson and ahead of China’s of Huawei Technologies.

The previous day Nokia, the world's top mobile phone maker, reported a 40 percent plunge in second-quarter profits.