Ericsson raised its 2020 sales targets due to what the company said was an improving outlook for its sales of wireless network equipment.
“With our focused strategy we have created a strong foundation of stability and profitability,” Ericsson CEO Börje Ekholm said in a statement. “Our strengthened portfolio and competitive cost structure have enabled us to grow in the third quarter of 2018, for the first time since 2014, on a constant currency basis, despite headwind from exited contracts and businesses. As the industry moves to 5G and IoT we are now preparing to take the next step to generate profitable growth in a selective and disciplined way.”
Specifically, as noted by Reuters, Ericsson raised its net sales goal to between $23.3 billion and $24.4 billion. The company also stuck to its target for operating margins to rise above 10% in 2020, excluding restructuring. Ericsson, though, said its longer term goal of boosting operating margins to greater than 12% would occur no later than 2022.
Ericsson said growth in its networks business “is expected to come from a stronger market, selective market shares gains, and expansion of the product portfolio into close adjacent markets. In 2019, investments in 5G trials will continue. The operating margin target for 2020 is unchanged at 15% – 17%,” the company said.
Ericsson is the top provider of wireless network equipment in the United States in terms of market share, according to research firm Dell’Oro Group, and is listed as a major vendor for all of the country’s nationwide wireless providers. And Ericsson is working to stamp out new customers as well, recently having signed network-build-out agreements with the likes of Dish Network and Ligado.
Ericsson’s news also comes shortly after the company reported its first profitable quarter since June 2016—and after the company laid off roughly 22,000 employees. The company said net sales in North America, the company’s biggest regional market behind Europe, jumped 21% year over year during the quarter and network equipment sales increased 24% in North America during the same period.
Ericsson, along with rival Nokia and other telecom equipment providers, is pinning most of its hopes on 5G, a network technology that most of the world’s telecom operators hope to deploy in some fashion in the coming years.