Ericsson reported stronger sales and operating profit than analysts had expected in the second quarter, and the network vendor said that its business in the U.S. market had stabilized during the period.
Ericsson CEO Hans Vestberg scheduled a meeting with senior management to discuss potential large-scale mergers and acquisitions that would help the company to compete against a merged Nokia and Alcatel-Lucent.
Ericsson reported continued weakness in the North American market in the first quarter as carriers continue to hold back on investing heavily in networks as they pay for spectrum licenses and other expenses. The Swedish vendor reported drops in net income and operating profit despite a jump in top-line sales that benefited from currency moves. Meanwhile, Ericsson's licensing revenue took a hit due to an ongoing patent dispute with Apple.
Ericsson CEO Hans Vestberg has seen the company revive itself and transform into a more software-focused vendor. And while Ericsson has been a leading vendor in deploying LTE networks, Vestberg wants to ensure that the company stays ahead of the pack when it comes to rolling out next-generation networks.
Ericsson posted tepid sales in the fourth quarter and although the company's gross margin was higher than expected the Swedish vendor is facing continued weakness in North America, its largest market by revenue.
Ericsson's net income dropped by SEK1 billion (€106 million/$120 million) in 2014 despite the company successfully offsetting a drop in sales in North America with higher infrastructure equipment revenues from Europe, Middle East and Asia.
LAS VEGAS--Ericsson said it is making significant progress in diversifying its customer base beyond wireless carriers. The company said that last year it derived fully 15 percent of its revenues from customers that are not wireless carriers, a number up from 10 percent in 2013 and 5 percent in 2009.
Video continues to dominate the traffic on wireless networks, according to top wireless executives who spoke here at the Consumer Electronics Show as part of a panel discussion on personal entertainment. And the increases in video traffic have spurred dramatic changes to the way networks and content are managed.
Ericsson plans to cut costs by $1.21 billion by 2017 and will slash jobs as part of that effort, though the vendor did not say how many positions it will cut. The cost cuts are part of Ericsson's larger strategic transformation toward software, media and working with customers that are not telecommunications carriers.
Ericsson CEO Hans Vestberg recently spoke with FierceWireless Editor-in-Chief Sue Marek about the company's transformation from a hardware to a software company, its sudden exit from the modem business and why he thinks 5G will be a reality in 2020. Hot Seat