The rapid expansion of Chinese firms Huawei and ZTE seems to be taking a severe toll on Swedish telecom major, Ericsson which witnessed almost flat revenues for the whole of 2009 but the net profit declined by 65%.

Total sales for the year 2009 were 206.5 billion kronor ($ 28.7 billion) when compared to 208.9 billion kronor in 2008 i.e. at a drop of 1 %. Net income was however significantly down from 11.7 billion kronor last year to 4.1 billion kronor by the end of 2009. This results in a slide of 65%.

The EPS (earning per share) too was rapidly down to 1.14 kronor in contrast to 3.52 kronor in 2008 at a decline of 68%.

“During the second half of 2009, Networks'' sales were impacted by reduced operator spending in a number of markets. Group sales for the full year were less affected and the operating margin increased slightly," said Hans Vestberg, president and chief executive of Ericsson.

For the quarter ended December 31, 2009, the company’s revenues declined 11% to 58.3 billion kronor. The growth in net too fell by 82% on a yoy comparison from 4.1 billion kronor to 700 million kronor. The EPS declined by 92% to 0.10 kronor from 1.21 kronor a year ago.

On a sequential basis, the performance is however on a positive trend with revenues on a 26% rise and net profit too declining only by 6%.

The drop in net for the whole year was mainly due to the cost incurred over restructuring expenses for the 5,000 job cuts announced last year. To achieve more cost savings the company is now executing 1,500 more job cuts.

Sales from Asia Pacific region including India declined by 18% to 16.7 billion kronor. On a sequential basis the revenues were up 9%.

The company says that future spending from mobile operators will be address the mobile broadband requirements and only marginal spending will be done to support and expand 2G networks except for growing markets.