Monday, January 24, 2011

Ericsson Sales Up 8% YoY on Mobile Broadband

Ericsson reported Q4 2010 sales of SEK 62.8 (58.3) billion., up 8% year-over-year and 32% sequentially. Sales for
comparable units, adjusted for currency exchange rate effects and hedging, increased 7% year-over-year. The year-over-year net impact of currency exchange rate effects and hedging was negative.

Gross margin in the quarter, excluding restructuring, increased year-over-year to 37% (35%) and was down from 39% sequentially.

Sales in Networks increased 14% year-over-year and 40% sequentially, primarily driven by increased demand for mobile broadband and investments in 2G expansions in China. While the supply of components has normalized during the quarter, we are still not fully meeting the increased demand on certain mobile broadband products.

Global Services sales decreased -1% year-over-year and increased 20% sequentially. The year-over-year decline is a result of lower levels of network rollout following the industry wide component shortage earlier in the year as well as a negative impact from a strong SEK. Managed services grew 5% year-over-year and with 16 contracts signed in the quarter, the positive business momentum remains unchanged. Multimedia sales recovered and grew 3% year-over-year and 50% sequentially with positive development within revenue management.

"Group sales in the quarter increased 8% year-over-year and 32% sequentially mainly driven by a strong development in mobile broadband" said Hans Vestberg, President and CEO of Ericsson. "Sales in the quarter for comparable units, adjusted for currency and hedging, increased 7% year-over-year. Adjusted cash flow in the quarter was strong at SEK 16.2 (13.6) b. and SEK 29.8 (28.7) b. for the full year.

Total number of employees at year-end amounted to 90,261 (82,493) of which 45,000 services professionals. In
2010, 5,250 individuals joined Ericsson through acquisitions and about 1,300 through managed services contracts.

Approximately 5,000 were made redundant and 6,000 recruited. The vast majority of recruitments took place in
India, China and Brazil. These new recruits were primarily in R&D and service delivery.