Telecom equipment maker Ericsson  is expected to unveil another set of weak earnings numbers on July 22 in a quarterly report that will be pored over for clues about carriers' future network spending.

After an unexpectedly positive start to 2008 that brought modest relief to battered investors, analysts have turned cautious on the stock again. Questions linger over when the firm can expect more of the high-margin network upgrade and expansion business it enjoyed until the third quarter of last year.

Citigroup and WestLB both cut their price targets for Ericsson this week. Shares in the firm have lost 23 percent from a 2008 high in late May and are down more than 50 percent since a collapse in earnings in the third quarter of last year.

The average forecast in a Reuters survey called for 3.79 billion Swedish crowns ($636 million) in second-quarter earnings before interest and tax, down 60 percent from a year earlier. 

 Also at the forefront of the market's mind: how the firm's cost-cutting measures are progressing, whether competitive pressures show any sign of easing and how well margins are holding up.

One question mark that will not loom so large will be the size of Sony Ericsson's contribution. The handset venture had issued a profit warning before analysts polished off their second-quarter forecasts for 50 percent-owner Ericsson.

Stuart Jeffrey, analyst at Lehman Brothers, said he was looking at both China's telecoms restructuring and the broad issue of data capacity growth.

"At what point does data growth lead to capacity spend? And that's for Europe and the U.S," Jeffrey said.

China kicked off a telecoms industry overhaul in early June as one of its mobile operators bought a fixed-line peer for $24 billion and sold a network for almost $16 billion. The restructuring is aimed at speeding up the roll-out of high-speed third-generation mobile services for China's 1.3 billion people.

Alcatel-Lucent  last month signed a $1 billion deal with China Mobile (0941.HK: Quote, Profile, Research) and Nokia Siemens Networks [NSN.UL] last week said it received network expansion orders worth 550 million euros ($878 million) from the same firm.

Ericsson has long said it is optimistic about the future because of the upward trajectory of data usage on mobile networks.

Of similar import, Jeffrey said, will be "anything we can hear or see regarding the pricing environment".

Mirko Maier, analyst at LBBW, was also eager to see if Ericsson signalled any letup in price pressure, in addition to whatever the company said about its own cost measures or any China-related deals.

Intense price competition both from large established players and more nimble Chinese network builders such as Huawei [HWT.UL] has robbed Ericsson of pricing power in recent quarters.

Lehman rates Ericsson "equal weighting", Jeffrey said. "We're not looking for things to get dramatically worse. But the stock's now back to our target price so we don't really have a strong view on it."

Source:reuters