Ericsson CEO Says Telecoms Can Handle Recession

GENEVA (AP) -- The chief executive of Sweden's LM Ericsson said Thursday he was confident the mobile telecommunications sector was in a stronger position than most to weather the global economic downturn.

"I think it is clear that telecommunications, mobile telecommunications in particular, have become such a necessity," Ericsson CEO Carl-Henric Svanberg told The Associated Press.

With so many new technologies entering the market, "it's quite clear for everyone that our sector will be much better off than other sectors," Svanberg said. "That doesn't mean that we won't feel it somehow, but we will be one of the better sectors."

The wireless equipment maker reported in April a 35 percent drop in first-quarter profit as weak results from its handset unit Sony Ericsson and higher restructuring costs took their toll. Still, it posted a net gain of $210 million and Svanberg said at the time that the effects of the global recession on the mobile network market were so far limited.

He referred to that guidance Tuesday on the sidelines of a disaster prevention conference in Geneva.

On the company's struggling mobile phone division, Sony Ericsson, he said that both Ericsson and Japan's Sony were "overall happy with the joint venture" and were working hard to revive it. Sony Ericsson posted a euro293 million loss in the first quarter as demand for its handsets fell by around 35 percent, which the company attributed to the global financial crisis.

"Now that we've had such a dramatic fall in demand, it forces the companies to do dramatic adjustments and that is going on," Svanberg said. "It's looking good so far."

He brushed aside as speculation the idea that the joint venture could be dissolved.

"I think there's always speculation around joint ventures because they aren't seen as something that will go on for 1,000 years," Svanberg said.

Ericsson will report its second quarter profit on July 24.

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