The sharp slide in Ericsson's share price during the past six months went into reverse on Friday after its first-quarter results sent its shares soaring 17 per cent to SKr14.5 - their biggest jump in five years, FT reported.
The increase made up some of the ground lost after the Swedish telecommunications equipment manufacturer issued a shock profit warning in the third quarter of last year. The warning had wiped out more than half the company's market value before Friday's numbers.
The rally was all the more extraordinary given that Ericsson reported a 55 per cent drop in first-quarter net profit year-on-year to SKr2.6bn ($434m) and the severe contraction of its operating margin from 19.3 per cent last year to 9.7 per cent.
But investment analysts had been expecting worse numbers. They found solace in a strong performance in the US, where sales rose 39 per cent year-on-year, continued strength in emerging markets and a belief that last year's profit warning would not be repeated.
Ericsson remains the only profitable company in the mobile infrastructure industry, where it competes alongside rivals such as Alcatel-Lucent and Nokia Siemens.
Nokia Siemens, the Finnish-German joint venture, last week reported an operating loss of €74m ($115m) in the first quarter and Alcatel-Lucent is forecast to report a quarterly loss of about €170m next week.
Ericsson issued a surprise profit warning in October 2007 after learning that operating income would drop 39 per cent to SKr5.6bn in the third quarter compared with the previous quarter, despite reassuring the market three weeks earlier that everything was fine.
The company blamed the profit warning on a shortfall in contracts to expand or upgrade existing mobile networks, notably in the US and western Europe.
Carl-Henric Svanberg, chief executive, said in an interview on Friday that the company now had a "firm grip" and was holding quarterly calls with all 25 market units globally, allowing it to spot any future sudden downturn earlier.
Mr Svanberg used moderate language to steer investors' expectations in the coming year. "Our business developed well in the quarter, considering the present market environment and the declining US dollar. We still find it prudent to plan for a flattish mobile infrastructure market in 2008," he said.
The decline in margins was attributed to new network builds in markets such as India as well as the effects of the dollar's decline. About 50 per cent of the firm's business is invoiced in dollars.
Mr Svanberg added, however, that recent strength in the US market could continue following the conclusion of the $20bn spectrum auctions in the country.