Ericsson losses less dire than expected

Telecom equipment provider Ericsson reported on Thursday that net profit plunged by half last year, hit by a charge for joint venture ST-Ericsson, but posted higher than expected sales in the fourth quarter.

Ericsson losses less dire than expected

The company also said it was confident about prospects this year as more operators boost their network capacity.

In 2012, Ericsson made a net profit of 5.575 billion kronor ($876 million) on sales of 227.779 billion kronor, about the same as in 2011.

Ericsson said in December that it would book a charge of 8.0 billion kronor after the announcement that French-Italian group STMicro was pulling out of ST-Ericsson.

The joint venture has not reported a single quarter of profits since being created at the beginning of 2009. In the fourth quarter of last year it reported a net loss of $133.0 million.

Chief executive Hans Vestberg said the company should benefit in the second half of 2013 from projects by telecom operators to increase the capacity of their networks.

In 2012, the company won more contracts to increase network coverage, which has traditionally been a less profitable part of the business.

“While the macroeconomic and political uncertainty continues in certain regions the long-term fundamentals in the industry remain attractive and we are well-positioned,” Vestberg said in a statement.

The results for the fourth quarter were hit hard by the outcome at ST-Ericsson which Ericsson is reportedly seeking to sell.

Ericsson reported a net loss for the quarter of 6.462 billion kronor.

Stripping out costs related to ST-Ericsson, the company would have posted a rise in net profit for the period.

Sales for the quarter rose by 5.0 percent on a 12-month basis to 66.936 billion kronor. This was better than the average of estimates by analysts polled by Dow Jones Newswires who had expected a 3.1 percent rise to 65.66 billion kronor.

Network sales were particularly strong in North America, where gross

margins had previously been suffering while the company grew its market share.

Shares in Ericsson were up 9.16 percent in early afternoon trading on the Stockholm exchange, which was down 0.20 percent overall.

AFP/The Local/dl

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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.