Dow Jones Newswire wrote that Ericsson, the world's largest maker of network equipment, Thursday reported weaker than expected second-quarter revenue and profit, as higher sales of network equipment were partly offset by restructuring charges and the strong Swedish krona against Ericsson's billing currencies.

Net income climbed to 3.12 billion kronor ($488 million) from 1.88 billion kronor a year earlier. Revenue rose 14 percent to 54.7 billion kronor. Analysts had predicted profit of 3.88 billion kronor on sales of 54.5 billion-kronor, the average estimates compiled by Bloomberg show.

Ericsson's profit was hit by a restructuring charge of 1.3 billion kronor as the company reduced staff in Sweden and was hit with a larger than expected charge for voluntary redundancies and early retirements.

The group employs 98,000 people, 10,500 more than 12 months ago, and leads its market, ahead of the German-Finnish group Nokia Siemens, the French-US firm Alcatel-Lucent and the rising Chinese manufacturers Huawei and ZTE.

The price of Ericsson shares dropped by 6.91 percent in initial trading to 85.55 kronor in a stable over market.

Ericsson had announced a strong improvement in performance from last year in the first quarter of this year.

Existing mobile phone networks are becoming saturated with traffic for mobile internet devices and smartphones which use 10 times more capacity than conventional mobile telephones.

Telecom operators are turning to equipment providers to increase capacity.

Chief executive Hans Vestberg said that strong growth in recent quarters was continuing, notably in Brazil, China, Germany, South Korea, India and Russia.

But sales in North America, the company's biggest market accounting for 22.0 percent of sales, fell by 6.0 percent, and sales in western Europe fell by 2.0 percent and also in the Mediterranean region by 2.0 percent.

“In the quarter we saw a change in market mix where Brazil, China, Germany, Korea, and Russia showed especially strong growth both year-over-year and sequentially,” Chief Executive Officer Hans Vestberg said in the statement. “The U.S. maintained its high business activity although sequentially the networks business was somewhat slower.”

Vestberg acknowledged that the overall outcome was mixed.

Excluding the effect of currency factors, sales rose by 27.0 percent on a 12-month comparison, but the rise of the krona reduced this to 14.0 percent.

The same day ST-Ericsson, the semiconductor joint venture between Ericsson AB and STMicroelectronics, said its second-quarter loss widened from a year earlier as sales fell. The net loss was $221 million compared with a loss of $139 million a year earlier, the Geneva-based company said in a statement.

“While the present financial situation is very tough, we are on track to complete the transition to our new product portfolio in order to realize our aim of profitable leadership,” Chief Executive Officer Gilles Delfassy said in the statement.