Mixed messages from Ericsson 3Q
Ericsson has become the latest telecom vendor bellwether to provide mixed signals in its latest financial results.
The company posted a 38% increase in Q3 net income to 3 billion krona (€343 million). But net sales fell 3% to 53 billion krona.
Ericsson CEO Hans Vestberg said the company's sales are under pressure due in part to unfavorable forex movements.
“In addition..., the major drivers for this development are the two large mobile broadband coverage projects, which peaked in North America in the first half of 2013. We also saw impact from reduced activity in Japan where we are getting closer to completion of a major project,” he said.
Networks revenue and global services revenue each declined 1% year-on-year, to 26.7 billion krona and 24 billion krona respectively.
But total gross margins improved nearly two percentage points to 32%, and operating income including joint ventures increased 36% to 4.2 billion krona.
Looking ahead, the Vestberg said he was encouraged that the company has picked up tenders in China's LTE rollouts, despite having had an insignificant share of the nation's 3G market. The pace of network investment is also picking up in Europe.
“The macroeconomic climate has stabilized in many OECD markets. However, uncertainty still remains in certain parts of the world. The long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market,” he said.
Ericsson's earnings are the latest set of conflicting results from telecom vendors. Over the last few days, Juniper Networks has announced plans to cut 3% of its workforce despite estimating it increased its revenue by 6% during Q3, while ZTE reported a 132% surge in nine-month profit but a 10% decline in revenue.