Ericsson said second-quarter pretax profit rose to 9.3 billion Swedish crowns (USD 1.40 billion) from 8.3 billion a year earlier. That compared with an average forecast of 9.8 billion crowns in a Reuters survey.

Sales totalled 47.6 billion crowns in the second quarter, just missing a 47.8 billion forecast.

The company said cash flow from operations rose to 4.2 billion crowns from 0.2 billion a year earlier. Cash flow has been a worry for investors as it has been declining for several quarters.

Analysts said the report was mixed.

"This was marginally weaker than expected in terms of the earnings. Sales were as expected while the cash flow was okay," said Jan Ihrfelt, analyst at Swedbank.

Ericsson repeated its forecast that growth in the GSM/WCDMA market -- 2G and 3G technology -- would be in the mid-single digits in 2007.

"We continue to outpace the market," Ericsson Chief Executive Carl-Henric Svanberg said in the earnings statement.

Ericsson has benefited from surging demand for mobile technology, with big contracts in emerging markets such as India making an increasingly large contribution to company coffers.

In the past week, Ericsson won its largest-ever contract -- a USD 2 billion deal to help India's top mobile operator expand.

Sales in Asia-Pacific climbed 32 percent from a year earlier but revenue in Europe during the quarter was flat and it was down 18 percent in North America.