STOCKHOLM: Telecom equipment giant Ericsson reported a 57-percent drop in second-quarter net profits Friday, a far weaker result than expected, as the economic crisis ate into the mobile phone market.

The Swedish company managed net profits of 831 million kroner (78.2 million euros, 110 million dollars), down 57 percent on the same period in 2008 and nearly twice as bad as the average predictions of analysts.

Experts polled by Dow Jones Newswires had forecast a profit almost double this.

"The effects of the global economic climate on the mobile infrastructure market are now more notable, especially in markets with currencies under pressure and a tougher credit environment," said chief executive Carl-Henric Svanberg in a statement.

Sales were up seven percent compared to the same period a year before, at 52.1 billion kroner, but this amounted to a three-percent fall when exchange rate fluctuations were taken into account.

The firm said it was also hit by restructuring costs. It announced 5,000 job cuts in January.

Ericsson's shares fell 6.7 percent in morning trading on the Stockholm exchange.

Ericsson's Finnish rival Nokia last week reported a 66-percent collapse in quarterly net profit to 380 million euros because of a drop in handset sales and weak prices.

The Swedish firm said however that demand for Internet services was picking up. That market accounted for just over a third of its sales in the second quarter.

"The consumer demand for new services and broadband capabilities are quickly accelerating and rollout of new technologies is ongoing in the world's leading economies," Svanberg said.

Two Ericsson joint ventures, Sony Ericsson and ST-Ericsson, also weighed on its results, the statement said.