* Q2 op profit 4.0 bln SEK vs 3.7 bln in Reuters poll
* Sales 54.8 bln SEK vs poll fcast 52.5 bln
* Ericsson shares rise 8 pct
* Repeats key contracts to boost H2 2014
(Adds CEO, analyst quotes, shares, details)
By Sven Nordenstam and Olof Swahnberg
STOCKHOLM, July 18 A recovery in Ericsson's
network equipment business pointed to strong results
for the rest of the year, propelling its shares towards their
biggest daily gain in more than three years.
In China, Ericsson is selling equipment for a massive
rollout of fourth-generation mobile networks. In developed
markets, it is benefiting from capacity upgrades as network
operators cope with a surge in mobile data traffic.
Ericsson expects recent contract wins to boost revenue
during the second half of the year.
"To us, industry fundamentals will strengthen as mobile
broadband networks mature, allowing Ericsson and its peers to
present higher profitability," ABG Sundal Collier said in a
research note, repeating a "buy" rating on Ericsson shares.
Comparable sales in networks grew 5 percent to a
forecast-beating 29 billion crowns, the fastest growth for the
unit in a year, following a 10 percent drop in the first
"After a slow start of the year, we are executing on
previously awarded 4G/LTE contracts in Mainland China and
Taiwan," Chief Executive Hans Vestberg said on Friday.
Ericsson's figures bode well for smaller peers Nokia
and Alcatel-Lucent, which report earnings
this month. Demand was robust in North America, where
Alcatel-Lucent is particularly present.
Ericsson shares were up 8.1 percent at 0943 GMT. Shares in
Finland's Nokia were up 2.6 percent whereas Paris-based
Alcatel-Lucent shares rose 4.0 percent, putting the trio among
the top six performers in the European FTSEurofirst 300 index
Operating income was 4.0 billion Swedish crowns ($585
million) compared to 2.5 billion in the year-ago quarter,
beating a mean forecast of 3.7 billion in a Reuters poll of
Sales were 54.8 billion crowns against a forecast of 52.5
billion, down by 1 percent from the year-ago quarter on a
comparable basis - a much smaller decline than the 7 percent
fall in the first quarter.
Ericsson's gross margin, a measure of underlying
profitability which is keenly watched by analysts, was 36.4
percent against a mean forecast of 35.4 percent.
Nokia reports results on July 24, and Alcatel-Lucent a week
($1 = 6.8341 Swedish Crowns)
(Additional reporting by Leila Abboud in Paris and Vikram
Subhedar in London; editing by Tom Pfeiffer)