Ericsson AB, the world’s largest maker of wireless networks, reported a 92 percent drop in fourth-quarter profit, falling short of analysts’ expectations as phone companies reduced spending on networks.

Net income slumped to 314 million kronor ($43.4 million) from 3.89 billion kronor a year earlier, Stockholm-based Ericsson said today in a statement. Analysts had anticipated profit of 2.5 billion kronor, the average of 17 estimates compiled by Bloomberg. Revenue slipped 13 percent to 58.3 billion kronor, shy of the 59 billion-kronor average of 34 analysts’ estimates.

Ericsson is expanding in services as revenue in its network-equipment business decline on lower spending by carriers and price competition from Chinese vendors. The company last year began a seven-year contract to manage networks for Sprint Nextel Corp. as well as a five-year management agreement with Zain in Nigeria.

“During the second half of 2009, networks’ sales were impacted by reduced operator spending in a number of markets,” Chief Executive Officer Hans Vestberg said in the statement.

Ericsson is building the core network for Swedish carrier TeliaSonera AB’s fourth-generation network in the country and in Norway, scoring a victory after Telenor ASA and Tele2AB chose China’s Huawei Technologies Co. to build their fourth-generation network in Sweden. Fourth-generation, or long-term evolution, is a technology for transferring data faster over mobile broadband networks.

 source£ºbusinessweek