Ericsson sales improve on mobile broadband

Swedish mobile network giant Ericsson announced increased sales and a sharply higher net profit thanks to mobile broadband sales, although its earnings slightly missed expectations.

Ericsson sales improve on mobile broadband

Ericsson, the world’s biggest mobile network maker, saw its fourth quarter sales grow 8 percent to 62.8 billion kronor ($9.6 billion), largely above the 2 percent hike expected by analysts surveyed by Dow Jones Newswires.

Ericsson CEO Hans Vestberg explained the strong recovery of sales was “mainly driven by a strong development in mobile broadband” in the fourth quarter after a largely disappointing 2010.

“Mobile data traffic is forecasted to almost double annually over the coming years,” he added.

The company’s net profit attributable to shareholders was of 4.32 billion kronor against only 314 million kronor for the same period a year earlier, but was slightly below analysts’ expectations of 4.84 billion kronor.

The company’s results were “mixed,” Redeye analyst Greger Johansson summed up.

“What was very positive is that they show pretty good sales growth, better than in many [previous] quarters and years,” he told business daily Dagens Industri.

Investors reacted positively to the company’s earnings report. At 12.30pm local time, shares were up 3.25 percent to 76.25 kronor on a flat Stockholm stock exchange.

“Growth is back, and that is what we were waiting for,” Ohman analyst Helena Nordman-Knutson told Dow Jones Newswires.

Sales in the fourth quarter increased the most North America, growing 49 percent compared to the same period in 2009 thanks to “organic growth as well as the acquisition of Nortel assets,” Ericsson said, adding it became the largest player in the region in 2010.

China and northeast Asia posted sales up 28 percent, northern Europe and central Asia sales were up 38 percent, but sales in Western and Central Europe and in the Mediterranean were still negative, falling 4 percent and 2 percent respectively.

For all of 2010, the company’s net profit increased threefold to 11.15 billion kronor, compared to 3.67 billion kronor a year earlier, when earnings were dragged down by heavy restructuring costs.

Sales in 2010 decreased 2 percent to 203.3 billion kronor compared to a year earlier, hampered by a sluggish economic context and a component shortage problem. The company said sales growth returned in the second half of the year. For the whole year, sales decreased or stayed the same in all regions except North America.

The Swedish company also benefited in 2010 from the return to profit of its mobile phone joint venture with Japan’s Sony, but its other joint venture, wireless technology company ST-Ericsson, widened its losses by 10 percent in 2010, to $591 million.

Ericsson has some 90,300 employees and is the market leader in mobile network equipment ahead of Finnish-German giant Nokia Siemens, French-based telecom equipment maker Alcatel-Lucent and China’s Huawei. The company said it would propose a dividend of 2.25 kronor per share, up from 2 kronor in 2009.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.