Ericsson's focus on improving margins yielded results during the first quarter, with the company reporting a 41% increase in net profit at the expense of a 9% decline in revenue.
The company revealed its net profit grew to 1.7 billion kronor ($258.5 million), up from 1.2 billion kronor a year earlier. Gross margins improved to 36.5% from 32% over the same period.
But sales declined to 47.5 billion kronor, down 9% from last year, or 7% when adjusted for comparable units and currency fluctuations.
Ericsson blamed the decline primarily on reduced activity in Japan and lower revenues from two large North American mobile broadband coverage projects, which peaked in 1H13. But 4G rollout projects in Japan, Taiwan and particularly in China helped offset this decline.
The vendor's operating cash flow meanwhile improved to 9.4 billion knoror, from a negative 3 billion a year earlier, partly as a result of the nine-figure payment from Samsung to settle their patent disputes.
Ericsson warned that political uncertainty in Russia, the Ukraine, parts of the Middle East and Africa have the potential to impact sales in the financial year ahead.
Ericsson shares fell nearly 5% after the results were announced, due largely to the decline in revenue and a missed profit forecast.
ZTE, another telecom vendor that has made improving margins a key priority, reported earlier this month that tripled its first quarter profit.