Thursday, October 21, 2010

Ericsson Cites Ongoing Component Shortages in Quarterly Report

Ericsson's sales in Q3 2010 were up 2% year-over-year and down -1% sequentially, as the company cited and industry-wide component shortage and supply chain bottlenecks. Ericsson said that although the situation has gradually improved, it remains a challenge to fully meet the demand for mobile broadband.

By segment, networks sales grew 6% year-over-year with a continued transition from voice to data related business. Mobile broadband sales, including radio, backhaul and packet core, increased in the quarter, especially driven by markets such as the US and Japan. Voice related sales remained slow. The company noted that demand for its multi standard radio base station RBS 6000 is at a high level and production levels are ramping up.

Global Services sales grew 3% year-over year and accounted for some 40% of total sales. In local currencies Professional Services sales grew 10%. The second half 2009 was negatively impacted by the reduced scope of a managed services contract in Italy. Network rollout sales decreased -8% year-over-year negatively impacted by supply chain bottlenecks as well as lower proportion of turnkey projects. During the quarter, 13 managed services contracts were signed of which eight were extensions or expansions of existing customer agreements. Year-to-date, 38 contracts have been signed, well above the number for full year 2009.

Multimedia sales declined -31% year-over-year. Managed Services sales in the quarter increased by 46% year-over-year. The year-over-year growth in Managed Services sales is primarily an effect of the added Sprint contract.

"We see continued growth opportunities in the market and the combined strength of our technology leadership, our scale advantage, along with global presence and skilled employees are our key assets," said

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