(Updating with business mix forecast, Western Europe outlook)

STOCKHOLM (Thomson Financial) - LM Ericsson AB's chief executive Carl-Henric Svanberg said price competition played a role in the sharp year-on-year decline in the company's first-quarter network margins.

Overall he attributed the margin decline to four key factors -- business mix, the effects of amortization connected to acquisitions, the weaker dollar and price competition.

"So price competition has played a role in the margin decline," said Svanberg, adding that he expects competition in the market to remain intense.

Svanberg also predicted that the current business mix "will continue for a while longer".

Speaking at the post-results conference call, Svanberg also the company's first-quarter sales in Asia grew by 30 percent with the exclusion of Bangladesh, Australia and Japan.

"Sales were up 30 percent excluding these countries, with China and India particularly strong," said Svanberg.

He attributed the weaker sales performance in Bangladesh to political turmoil, and in Australia and Japan to tough comparisons from the first quarter of last year.

But he said neither the strong growth in India and China, nor the revival of demand in North America warranted altering Ericsson's outlook for the global network market to be "flattish" in 2008.

"We've said we expect the market to be flattish, I don't think there's any point in getting into degrees of flatness," said Svanberg.

He remains confident the network market in Western Europe will start to pick up at some point, but said "it will gradually happen". However, he said upgrades in Western Europe are currently being stymied by sector consolidation in the region.

"When you have consolidation it puts upgrades on hold as nobody (in the merged company) knows what's going to happen," said Svanberg. simon.richardson@thomsonreuters.com sjr/rw/sjr/rw

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