The major European network equipment vendors are still facing stiff competition from Asian rivals such as Huawei and ZTE, but they are expected to post improving second quarter results, according to an earnings preview by Dow Jones Newswires.
Ericsson is expected to boost both sales and profits, partly due to better stability in its service business and the weak Swedish krona. The company recently secured a $5 billion deal with Sprint Nextel to manage the carrier's networks, which could lead to more network outsourcing deals, the report said. In the first quarter, Ericsson's net profit fell to $212.9 million, down from $329 million in the year-ago quarter. Net sales jumped 12 percent to $6.14 billion, up from $5.48 billion, boosted by currency gains.
Nokia Siemens Networks continues to face challenges, and may report a loss for the second quarter. However, its margins and profitability are expected to improve. Nokia Siemens said in the first quarter that it expects the network infrastructure market to contract 10 percent this year. The company is looking to secure a stronger foothold in the North American market by acquiring Nortel Network's wireless assets.
As for Alcatel-Lucent, which has focused intently on cutting costs, the company is expected to post a narrower loss in the second quarter as well as improved margins, partly on better performance in the United States. The company expects to meet full-year guidance. In the first quarter, Alca-Lu reported a net loss of $539 million, wider than the loss of $241.8 million in the year-ago quarter. The company's revenue for the quarter dropped 6.9 percent to $4.81 billion, down from $5.15 billion last year.
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