Wednesday, October 19, 2011

Ericsson's Sales Rise 17%, Driven by Mobile Broadband

“Group sales in the quarter increased by 17% year-over-year driven by a continued strong demand for mobile broadband as well as increased services revenues,�? stated Hans Vestberg, President and CEO of Ericsson. Operating income, excluding joint ventures, was SEK 6.3 (6.2) b. in the quarter and net income amounted to SEK 3.8 (3.6) b., an increase of 6%. The company said it is benefitting from the rising demand for smartphones and the resulting inexorable rise in mobile data traffic. Ericsson also believes it is gaining market share globally.

Some highlights for the quarter:

Sales for comparable units, adjusted for currency and hedging, increased 24% year-over-year.

Networks sales grew 25% year-over-year. The sequential decrease of -3% was attributed to seasonality and reduced CDMA sales in North America. All regions except North America, Northern Europe & Central Asia, Mediterranean and India showed sequential growth in Networks. In the quarter, all remaining effects from the earthquake and tsunami in Japan in March this year on Ericsson's supply chain have been eliminated and lead times are back to normal. With economic uncertainties in parts of the world, we cannot exclude somewhat more cautious short-term operator spending.

Segment Global Services sales grew 7% year-over-year and sequentially and Professional Services, currency adjusted, grew by 13% year-over-year. Managed services showed good development with increased sales of 12% sequentially, following 24 new managed services contracts reported in the second quarter.

Segment Multimedia sales grew 11% year-over-year and 8% sequentially, with good traction also this quarter for revenue management
in Middle East and Sub-Saharan Africa.

ST-Ericsson posted net sales $412 million slightly ahead of expectations, even when excluding IP licensing to a third party, but there was still an operating loss $194 million. Q4 net sales are expected to be slightly up sequentially.

Sony Ericsson saw sales rise 33% over Q2. Android-based smartphone sales represent >80% of Q3 sales.