Sunday, October 28, 2012

Ericsson's Global Services Now Represent 45% of Sales

Citing tighter carrier spending on wireless infrastructure projects, Ericsson reported lower Q3 2012 revenue of 54.6 billion SEK (US$8.14 billion  ), down 2% YOY and down 1% compared to Q2.  Net income declined 42% YOY to SEK 2.2 billion, impacted by lower profitability in Networks.

Ericsson cited weaker sales in parts of Europe, China, Korea and Russia as well as continued decline in CDMA equipment sales.  This was partially offset by strength in North America.

“Demand for Global Services and Support Solutions continued to be good, while Networks showed a decline in sales YoY. In North America Networks sales developed favorably, despite the expected decline in CDMA sales, while parts of Europe, China, Korea and Russia continued to be slow,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). “The growing Global Services business contributes not only with topline but also with stable operating profitability and, together with Support Solutions, represented more than 50% of Group sales," stated Hans Vestberg, Ericsson's CEO.

Some notes:

Global Services grew 19% YoY and 1% QoQ. Global Services represented 45% (37%) of Group sales in the quarter compared to 44% in Q212.

Network sales were down 17% YOY to SEK 26.9 billion (US$4.0 billion)

Ericsson cited good traction for the Smart Services Router (SSR), with 13 new contracts signed compared to seven in Q212.

Ericsson noted good growth for the its fixed and mobile IP portfolio, with accelerating demand for AIR, its antenna-integrated radio and part of the RBS6000 family.

CDMA sales in the quarter amounted to SEK 1.6 b., a decline of -50% YoY and with lower operating margin than average in Networks.

LTE rollouts are accelerating in Latin America, where Ericsson claims a 50% share

ST-Ericsson is still in a challenging situation although performance improved
in the quarter.

Ericsson's total number of employees at the end of the quarter increased to 109,214 (108,095) due to the addition of service professionals mainly in India and the acquisition of Technicolor Broadcast Service Division.