Thursday, January 31, 2013

Ericsson Hits 6% Growth Rate in Q4 Driven by N. America LTE

Driven by improved Network sales primarily in North America, Ericsson reported Q4 2012 sales of SEK 66.9 billion (US$10.52 billion), up 5% year over year and up 23% over Q3 2012.  However, there was a net loss of SEK 6.3 billion (US$0.99 billion) due to the restructuring charges at ST-Ericsson.  Various options are still being considered for dealing with ST-Ericsson.

"Our segments showed mixed developments during the year with strong growth in Global Services and Support Solutions, while Networks had a more challenging year. Support Solutions went from losses in 2011 into profitability and together with Global Services represented close to 50% of Group sales in 2012, compared to 42% in 2011," says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).

"During the year profitability was negatively impacted by operating losses in ST-Ericsson, the ongoing network modernization projects in Europe as well as the underlying business mix, with a higher share of coverage projects than capacity projects. With present visibility of customer demand, and with the current global economic development, underlying business mix is expected to gradually shift towards more capacity projects during the second half of 2013.

Some additional highlights:

  • CDMA sales were down again by 18% to SEK 2.5 billion
  • Global Services now represents 42% of Ericsson's overall revenue
  • Global Services grew 4% YoY and 15% YoY
  • Ericsson signed 19 contracts during Q4 for its Smart Services Router (SSR)
  • Demand for microwave transport is gaining traction
  • Multimode LTE FDD/TDD base stations are now in commercial operation
  • The demand for IMS is increasing as operators start to implement VoLTE