Earnings

Vodafone results boosted by emerging markets

Mon, 26 May 2008 06:59:58 -0400

Vodafone is expected to announce a full-year profit driven by sales in India and Turkey and growing demand for high-speed mobile Internet services. While the company does not declare its figures until May 27th, a pool of 13 industry analysts expects the company to report net income of £6.35 billion, compared with a loss of £5.43 billion a year earlier.

Last November, the company raised its sales and profit forecasts on faster growth in India and Turkey, as well as higher revenue from wireless Internet access in Europe. Two months later, Vodafone said third-quarter sales from wireless services, which include voice, data, messaging and broadband revenue, rose 4.2 per cent.

Vodafone has acquired assets in emerging markets to make up for slower growth in Europe, and this month reiterated its interest in raising the 50 per cent stake it holds in Vodacom Group, South Africa's largest mobile-phone company.

For more on this story:
-read this article

Growing competition hits Ericsson's margins

Mon, 28 Apr 2008 06:59:57 -0400

While Ericsson's share price jumped late last week by more than a quarter after the company unveiled surprisingly strong first-quarter profits, its CEO, Carl-Henric Svanberg, warned of uncertainties ahead.

Chief among his concerns was price competition which played a significant role in the sharp year-on-year decline in the company's Q1 infrastructure margins. He also highlighted three other areas that contributed to this margin squeeze-- business mix, the effects of amortisation connected to acquisitions, and the weaker U.S. dollar.

But Svanberg remained confident that the network market in Western Europe would start to pick up at some point, but said "it will gradually happen." However, he said upgrades in Western Europe were currently being obstructed by telecoms consolidation in the region. But he said neither the strong growth in India and China, nor the revival of demand in North America warranted altering Ericsson's outlook for the global network market to be "flattish" in 2008.

For more on this story:
- read Interactive Investor

Related stories:
Vodafone selects Ericsson for national mobile broadband rollout. Ericsson article
Ericsson inks $1.44 billion in China equipment deals. Ericsson article

Sony Ericsson ships 22.3M phones in 1Q

Thu, 24 Apr 2008 06:59:58 -0400

A slowing economy and rising component costs didn't stop handset maker Sony Ericsson from reporting a 2 percent increase in handset shipments. The firm said in first quarter 2008 it shipped 22.3 million handsets, a 2 percent increase year over year. However, the company also reported that pre-tax profits for the quarter were $308.1 million, down from $795.6 million in fourth quarter 2007 and $574.9 million a year ago. Net income for the quarter $211.1 million a decrease of 48 percent from the year ago quarter of $403.27 million. Average selling price decreased to $192 down from $195 in fourth quarter.

The drop in profits wasn't a surprise thanks to the company's revised forecast last month that indicated its profits would only be in the $239.5 million to $319.3 million range.

The company blamed the decrease on higher research and development costs. President Dick Komiyama said that the company expects to see some positive results from its new products that it announced in the first quarter, including the Xperia X1, a high-end multimedia convergence phone based on Windows Mobile that will launch in the second half of the year. To that end, the company also released two new HSDPA handsets for the European market, the Z780 and the G502, both of which come with Google Maps for Mobile.

For more,
- see this press release about Sony Ericsson's earnings
- And see this release on the new phones

Related stories:
Hands-on with Sony Ericsson's Xperia. Sony Ericsson story
Mobile World Congress: SE's Windows device. See this Sony Ericsson article

Vodafone's U.S. strategy comes under the spotlight

Mon, 04 Feb 2008 06:59:58 -0500

While Vodafone smoothly announced its latest KPIs--and very good they looked as well--the company's well-oiled PR machine was unable to staunch awkward questions regarding its U.S. JV, Verizon, and its expensive involvement in the 700MHz spectrum auctions.

Verizon's decision to compete directly with Google for spectrum has worried some investors as to when the U.S. company might resume dividend payouts. Vodafone has come under increasing pressure from its major investors for Verizon to switch from paying down its debt and return money to shareholders. However, Vodafone's CEO, Arun Sarin, claimed to be very relaxed about Verizon's involvement in the spectrum auction and its actions were anticipated. "Obviously we knew about the auction a couple of years ago so there is nothing unusual going on here," he said.

Sarin also claimed to be comfortable with its shareholding in the French operator, SFR, despite SFR's owner, Vivendi, calling for Vodafone to sell its stake. "Frankly it's a very good business, it's a good partnership, it produces good dividends," he concluded.

For more on this story:
- read The Times and Ovum

Ericsson to cuts costs as profits plummet

Mon, 04 Feb 2008 06:59:56 -0500

Blaming its push into low-margin markets for a dramatic fall in profits, Ericsson's CEO, Carl-Henric Svanberg, is looking to reverse the situation by imposing a cost cutting programme that will see around 1,000 of its Swedish workers laid off.

The company reported a Q4 net profit decline of 42 per cent to 5.6 billion kronor (US$880 billion), down sharply from 9.73 billion kronor in the same period a year ago. However, most financial analysts seemed relaxed about this news, it having been anticipated ever since the Stockholm-based company had shocked the market last October with a hefty profit warning and a surprise cut in its 2007 outlook--forcing its CFO to step down.

Svanberg explained the profit decline on the continued rapid build out of the company's infrastructure products in emerging markets. "Our significant market share gains have resulted in a higher proportion of new network builds with initial lower margins."

Commenting on the news that Motorola might split its operations, Svanberg said he would be very cautious before making any acquisitions. "As business professionals we look at everything, but we would take a very cautious view on such a thing because we believe you are better off doing it on your own."

For more on this story:
- read Cellular News, AP and Fox Business

Sony Ericsson; profits down, market share up

Thu, 17 Jan 2008 06:59:58 -0500

Sony Ericsson, a joint-venture between Japan's Sony and Sweden's Ericsson, increased the number of handsets it shipped during the fourth quarter by 18 per cent year-on-year to 30.8 million, but net profit fell 17 per cent due to higher operating costs as it expanded its handset portfolio in emerging markets. The company says it is still aiming for the number three spot and its current momentum makes this goal realistic and achievable. The key numbers were: operating costs rose to €724 million from €623 million, and net profit fell to €373 million from €447 million. The net profit was actually higher than analysts expected so the news was reasonably well received by the markets. Sony Ericsson sold more than 100 million phones in fiscal year 2007, increasing its share of the global handset market by two points to 9 per cent.

For more on this story:
- go to Cellular News, Market Watch and Yahoo

Nokia share price slumps on poor infrastructure margins

Thu, 06 Dec 2007 06:59:58 -0500

While announcing a series of new products and services at its Capital Markets jamboree, Nokia sneaked out a warning that its telecoms equipment business--Nokia Siemens Networks--would not generate a double digit operating margin until the end of 2009.

The company's shares lost four percent on this news and it underlines again the difficulties many of the long-established infrastructure developers are encountering, not helped by the entry of Asian manufacturers keen to grab market share at almost any price. Last year Nokia said that NSN would have a 10 percent plus operating margin by the first quarter of 2008, a number that will now obviously not be achieved.

Regardless of NSN's poor performance--which will rejuvenate rumours of its sale, Nokia unveiled plans to attack the heartland of the iPhone by having its own touchscreen phone ready by next year, together with a 'free' music download service in partnership with Universal Music.

The deal with Universal will enable consumers--starting from the second half of 2008, to download music under the offer--to be called "Comes with Music," to receive free material from Universal's entire back catalogue for 12 months and to be able to keep all the music.

However, Nokia would not confirm whether a one-off fee would be payable to offset the cost of acquiring the rights to Universal's music, which will be protected by DRM software, and will not be playable on any other device.

Downbeat Ericsson shocks market

Thu, 22 Nov 2007 06:59:54 -0500

Having issued a surprise profits warning only last month, the leading cellular infrastructure supplier, Ericsson, has again caused a market upset by revealing that sales for the remainder of the year would be at the very bottom of expectations.

If this was not enough, the newly appointed CFO, Hans Vestberg, said there would also be pressure on margins in the coming quarters because of the cost of building new networks. However, he said that margins should recover by the second half of next year or the beginning of 2009.

The reason behind this latest warning, according to Ericsson, is that the markets in America and Europe had become much tougher and performance had also been affected by political unrest in some of its emerging markets.

Read more:
- on this story at telecoms.com, The Times and Financial Times

Vodafone posts big profit, ups full-year forecast

Thu, 15 Nov 2007 06:59:58 -0500

Vodafone came back in a big way. The world's largest operator, in terms of revenue that is, announced a profit of US$6.76 billion during the six months ended September 30, compared with a loss of US$11 billion during the same period in 2006. Even more impressive was its near 50 percent increase in data revenues during the first six months of its financial year. Data revenues jumped 48.8 percent to US$2 billion in the first half of this year, accounting for 6 percent of the giant operator's total service revenues. Vodafone now supports some 21.4 million 3G devices compared with 11.1 million in 2006.

Vodafone's overall revenues reached US$35 billion, an increase of 9 percent from the same period last fiscal year. The rise was largely driven by emerging markets. Based on these results, Vodafone raised it revenue and profit projections for the full year. Revenue for the year is now anticipated to be around US$71 billion to US$73 billion, while adjusted operating profit will likely fall between US$20 billion and US$20.5 billion.

Vodafone isn't out of the woods yet. The company warned that competitive and regulatory pressures in Europe will put pressure on the company's revenues and margins. That's why it is placing such a heavy emphasis on emerging markets.

For more about Vodafone's results:
- read these articles from telecoms.com and Unstrung