Light Reading

Ericsson Reports Q1

Light Reading
News Wire Feed
Light Reading
4/23/2014
50%
50%

STOCKHOLM -- First quarter highlights:

  • Sales in the quarter were SEK 47.5 (52.0) b. Sales for comparable units, adjusted for currency, decreased -7% YoY and -28% QoQ
  • Sales declined YoY, primarily in North America and Japan but partly offset by China, Middle East and Latin America
  • Business mix in the quarter was mainly driven by mobile broadband capacity projects. With current visibility, key contracts awarded will gradually impact sales and business mix, mainly in the second half of the year.
  • Operating margin improved YoY in all segments to 5.5% (4.0%) mainly driven by mobile broadband capacity sales and lower restructuring charges
  • Operating income amounted to SEK 2.6 (2.1) b.
  • Cash flow from operating activities was SEK 9.4 b. driven by the payment from Samsung related to the new license agreement as well as reduced trade receivables.

    Comments from Hans Vestberg, President and CEO of Ericsson:

    Sales for comparable units, adjusted for currency, declined by -7% year-over-year, with continued negative impact from North America and Japan. All segments showed margin improvements.

    The main reason behind the decline in sales is, as previously communicated, lower revenues from two large mobile broadband coverage projects in North America, which peaked in the first half of 2013, and the impact from reduced activity in Japan. This was partly offset by growth in China, Middle East and Latin America. The decline in sales impacted segment Networks as well as the Global Services network rollout business.

    Our focus on profitability is paying off with gross margin improvement YoY, both including and excluding restructuring. All segments also showed improved operating margins. The business mix in the quarter was predominantly driven by mobile broadband capacity projects. In addition, some of our customers invested more in software to improve network performance and user experience.

    Operating cash flow amounted to SEK 9.4 b., compared to a negative operating cash flow of SEK -3.0 b. in the first quarter last year. The payment from Samsung, related to IPR licensing, as well as lower sales had a positive effect on cash flow. Our continued efforts to reduce working capital through a better order-to-cash process are progressing well.

    North America is currently characterized by operator investments in capacity and quality enhancements. At the same time we continue to strengthen our position in strategic areas. We are pleased to have been named partner to AT&T for their Domain 2.0 initiative which aims to simplify and scale their network utilizing Network Function Virtualization (NFV) and Software-Defined Networking (SDN).

    In region North East Asia we are executing on previously awarded 4G/LTE contracts in mainland China. In addition, we have been awarded important 4G/LTE contracts in Japan and Taiwan.

    In Europe, we have been awarded a five-year contract as part of Vodafone's Project Spring. It includes upgrades and expansions of Vodafone's 2G and 3G networks, and build-out of 4G/LTE along with professional services.

    There is continued demand for our services offering and in the quarter we have won new managed services business in several regions. With seven additional operators announcing trials of the Ericsson Radio Dot System we see strong interest in the solution. The innovative small-cell indoor solution will be commercially available later this year.

    With current visibility, key contracts awarded will gradually impact sales and business mix, mainly in the second half of the year.

    Political unrest prevails in parts of the Middle East and Africa and is still impacting sales. There is also an increased political uncertainty in Russia and the Ukraine. In 2013 Ericsson had SEK 5.9 b. in sales in Russia and Ukraine. The current political uncertainty has not impacted sales in the first quarter.

    In a transforming ICT market, Ericsson continues to evolve through investments both into its core business and in new and targeted areas. Through our technology and services leadership we are well positioned to continue to stay relevant as our customers move to capture new market opportunities.

    Ericsson AB (Nasdaq: ERIC)

    (0)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
    Flash Poll
    From The Founder
    Anshul Sadana answers questions from Steve Saunders, Light Reading's founder and CEO, about Arista's CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
    Live Streaming Video
    CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
    Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
    Between the CEOs
    Video Exclusive With Basil Alwan, Alcatel-Lucent

    7|24|15   |   26:44   |   (4) comments


    Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
    LRTV Custom TV
    VDF: Enable the Financial With Mobile Money

    7|20|15   |   06:53   |   (0) comments


    Ian Ravenscroft discusses how operators can expand to occupy the entire digital services value chain through service innovation.
    LRTV Custom TV
    Telefónica on OSS Transformation

    7|20|15   |   06:01   |   (0) comments


    Jose Gonzales discusses the details of Telefónica's operation transformation program.
    LRTV Custom TV
    Judi Achmadi on Huawei's Cloud Storage Solution

    7|20|15   |   03:33   |   (0) comments


    Judi discusses the key business goals of TelekomSigma's public cloud service and how Huawei's solution helps them address challenges.
    LRTV Custom TV
    KPN Enlightening Digital Business & IT Transformation

    7|20|15   |   06:19   |   (0) comments


    Rob de Beer discusses the changes that operators need to make with service innovation now coming from the Internet world.
    LRTV Custom TV
    Stratus Telco-Grade Cloud Solutions & NFV

    7|20|15   |   07:34   |   (0) comments


    Ali Kafel from Stratus Technologies addresses high-availability concerns within the telco industry with a solution that enables telcos to provide high-availability and stateful fault-tolerance using a software-based approach.
    LRTV Documentaries
    The Six Million Dollar Business Man

    7|20|15   |   01:52   |   (0) comments


    Steve Saunders, publisher. A man barely alive after an acquisition malfunction imploded the company he founded. Gentlemen, we can rebuild Light Reading. Better, faster, stronger.
    Between the CEOs
    CEO Chat With Anukool Lakhina, Guavus

    7|20|15   |   38:51   |   (1) comment


    Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
    LRTV Custom TV
    IBM's Flash Storage With Intel QuickAssist

    7|20|15   |   03:18   |   (0) comments


    Intel's Bev Crair and IBM's Eric Herzog discuss how IBM's V9000 Flash Storage System has helped customers around the world. Featuring real-time compression powered by Intel QuickAssist Technology, the V9000 is a next-gen flash storage solution.
    LRTV Huawei Video Resource Center
    Thailand's AIS: Transforming to an FMC Operator

    7|17|15   |   4:53   |   (0) comments


    Saran Phaloprakarn, Senior VP of Fixed Broadband Business Management of Thailand's AIS, was a keynote speaker at the first Asia-Pacific Ultra Broadband Summit in Bangkok. In this video, he talks to Heavy Reading about transforming into an FMC (FBB+MBB+Content) operator.
    LRTV Huawei Video Resource Center
    Cambodia's TRC Discusses Its Plans for National Broadband

    7|17|15   |   10:33   |   (0) comments


    In this video, Chakyra Moa, Chairman of Telecommunication Regulator of Cambodia (TRC), talks in in-depth with Heavy Reading about the Cambodia's current telecom market and TRC's goals and expectations for the future.
    LRTV Documentaries
    5G Phone

    7|16|15   |   2:09   |   (4) comments


    A man has an opportunity to purchase the world's first working 5G phone. Imagine the possibilities...
    Upcoming Live Events
    September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
    September 16, 2015, The Westin Galleria Dallas, Dallas, TX
    September 16, 2015, The Westin Galleria Dallas, Dallas, TX
    September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
    October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
    November 5, 2015, Hilton Santa Clara, Santa Clara, CA
    December 1, 2015, The Westin Times Square, New York City
    All Upcoming Live Events
    Infographics
    Network operators start seeing savings from NFV in the first year, according to a study by Affirmed Networks and ACG.
    Hot Topics
    AT&T U-verse TV Hits the Skids
    Alan Breznick, Cable/Video Practice Leader, 7/24/2015
    Robbins Succeeds Chambers as Cisco Changes CEOs
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/27/2015
    Qualcomm Wants FCC to Stay Out of LTE-U Fray
    Sarah Thomas, Editorial Operations Director, 7/27/2015
    RJio to Launch Its Own 4G Devices Brand
    Gagandeep Kaur, Contributing Editor, 7/27/2015
    Like Us on Facebook
    Twitter Feed
    September 22, 2015
    Media Begins With “Me”
    Webinar Archive
    BETWEEN THE CEOs - Executive Interviews
    Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
    Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
    Cats with Phones
    Distract-a-Cat Click Here
    The vibrate function makes for a useful cat distraction.