Ericsson announced it expects weak margins to continue in the second quarter with improvement coming in the second half of 2006. The company's margins fell 43.3 percent in the first quarter primarily because of its acquisition of Marconi. UBS says Ericsson paid the price in the first half, investing in future growth areas such as managed services, swap-out network deals and greenfield networks. "We believe this is the right strategy as these investments should lead to better revenue growth and stronger margins in [the second half of 2006] and into 2007."
For more about Ericsson's margin guidance:
- read this article from Dow Jones