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By Bloomberg

Ericsson AB reported sales trailing analysts’ estimates as phone companies in North America curbed projects to expand their wireless networks.

Sales rose 1 percent to 68 billion kronor ($8.2 billion), Stockholm-based Ericsson, the world’s largest maker of wireless networks, said today. Analysts predicted 70.5 billion kronor, the average of estimates compiled by Bloomberg. A key profit margin beat estimates, signaling Ericsson is managing to contain its costs.

U.S. carriers are curtailing expenditures after upgrading their networks to so-called fourth-generation technology allowing faster data speeds for smartphones and tablets. Ericsson is also facing competition from Nokia Oyj and Huawei Technologies Co., prompting the Swedish company to expand its services business, cut jobs and focus on more lucrative contracts.

“It was a bit of a mixed bag,” said Lars Soederfjell, an analyst at Aalandsbanken in Stockholm. “Those who are bullish will focus on the margin beat, while those who aren’t will look more at the weak top line.”

Gross margin, or the percentage of sales after production costs are deducted, was 36.6 percent, compared with the average estimate of 34.7 percent.

Shares of Ericsson fell 2.8 percent to 100 kronor at 9:10 a.m. in Stockholm, valuing the manufacturer at 329 billion kronor. The stock is trading near its highest level in seven years as the company reduced costs and pushed into services.

America ‘Slow’

Ericsson’s sales benefited from an 18 percent drop by the krona against the dollar last year, which means that revenue generated in the U.S. is worth more when brought home and converted to the Swedish currency. Still, Ericsson used hedging contracts to protect against exchange-rate changes, so currency swings’ impact on the company’s profit is limited.

Net income declined to 4.22 billion kronor from 6.41 billion kronor a year earlier.

Sales in North America, which makes up about a fifth of revenue, fell 5 percent as carriers invested in networks at a slower pace to focus on acquisitions and buying wireless spectrum, Ericsson said. North American networks business will “remain slow in the short term,” the company projected.

Revenue in western and central Europe rose 17 percent as customers including Vodafone Group Plc spent money to enhance network quality and capacity.