Ericsson forecasts 3-5% growth in network gear market in years ahead

Ericsson (NASDAQ:ERIC) predicted that the market for network gear will grow 3 percent annually or more in the years ahead, and said the fundamentals of its business remain solid.

The world's largest network equipment vendor gave its forecast at its annual analyst conference, and said looking ahead through 2016 it expects steady growth, with no major changes for the compound annual growth rates (CAGR), compared with what it forecasted last year. Ericsson expects that the total network equipment market will show a CAGR of 3-5 percent, while the telecom services business is expected to grow at a CAGR of 5-7 percent. The firm said the market for support solutions is forecasted to show a CAGR of 9-11 percent.

Source: Ericsson. Click here for the company's full PDF presentation.

Ericsson noted that 58 percent of its business is related to mobile broadband, while managed services make up 11 percent of its sales. In the years ahead, the company wants to establish "leadership positions" in segments as diverse as cloud, TV and media, IP networks, modems and OSS/BSS before expanding into new areas such as analytics and industry verticals, including energy and transportation.

"Our market leading position gives us a unique opportunity to work with the most successful customers around the world. Our leading position in North America, currently the most advanced ICT market in the world, gives us a head start in understanding the changing industry landscape," Ericsson CEO Hans Vestberg said in a statement. "As our customers' businesses transform, our job is to make sure that we continue to turn our global experience and leading technology into attractive and relevant solutions, driving greater profits for them."

Looking ahead to 2014, the company wants to focus on profitable growth as well as generating more revenue from its patent portfolio and software sales. The company also said it wants to maintain a price premium from delivering "superior performance."

In the third quarter, Ericsson's sales in North America declined as LTE coverage projects peaked, and overall the company said it was "currently seeing sales coming under some pressure." However, Ericsson hopes to build on its TD-LTE wins in China and that in Europe, "the pace is picking up in the European market with continued WCDMA/LTE investments." Vestberg late last month that Ericsson "now sees growth in several European markets and margins are also improving as the network modernization projects gradually come to an end and we engage more in new capacity and LTE business."

For more:
- see this release
- see this Ericsson presentation (PDF)
- see this Bloomberg article

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