Ericsson upbeat about network gear market in 2013

Ericsson (NASDAQ:ERIC) Chairman Leif Johansson said the company sees a more stable and healthy market for network equipment in 2013 as demand grows in the United States and China begins its march toward LTE.

"I am a little more optimistic on the U.S.," Johansson told Bloomberg. "Perhaps Europe too has stabilized. I don't think we have any more bad news coming from Europe." He said the outlook for overall 2013 demand is "stable and slightly on the positive side."

According to most analysts, Ericsson still leads the network infrastructure market, especially for LTE. Analysts at Technology Business Research think Ericsson's global LTE market share will dip in 2013, but only slightly, down from 34 percent in 2012 to 32 percent in 2013.

Starting in 2011, Ericsson began a number of contracts to upgrade and modernize networks, projects with high initial costs. However, now Ericsson anticipates that it will turn those projects into "capacity" operations with more software sales and higher margins. Ericsson also anticipates that China will continue to grow; China Mobile, for example, plans to increase capital expenditures by 49 percent in 2013 as it moves to deploy TD-LTE service. In 2012, China and northeast Asia made up about 17 percent of Ericsson's sales, according to Bloomberg.

Separately, Ericsson said it bought Microsoft's (NASDAQ:MSFT) IPTV Mediaroom business for an undisclosed sum. The deal, which had been rumored for several weeks, will let the Swedish vendor add IPTV technology and skills to its growing services business. The deal is expected to close during the second half of 2013; Mediaroom employs more than 400 people worldwide.

"This deal is within range where we previously bought a company called Optimi for $99 million and where we also bought LG Nortel for $234 million," Ove Anebygd, vice president and head of TV at Ericsson, told Reuters. "So this is somewhere in between the two."

Ericsson has been making waves in the content and media market in recent months. In February the vendor unveiled a new unified content delivery network (CDN) solution called Ericsson Media Delivery Network. The solution uses Ericsson's advanced packet core and radio capabilities as well as intelligent content management capabilities. Ericsson said the CDN solution will help operators make money on video delivery and content providers provide quality experiences across all networks.

Further, in January Ericsson acquired IT consultancy Devoteam's Telecom & Media operations in France. With the move Ericsson picked up 400 French-based consultants with expertise in IP multimedia subsystems, delivery platforms and radio/TV networks.

For more:
- see this Bloomberg article
- see this release
- see this Microsoft blog post
- see this Reuters article

Related Articles:
Report: Ericsson readies bid for Microsoft's IPTV software unit
Ericsson rules the LTE roost, but TD-LTE will boost rivals
Report: Ericsson, Huawei tie for top spot in RAN market share
Ericsson's North American sales surge, vendor predicts improving margins

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