Cisco/Ericsson Partnership to Miss $1B Sales Target in 2018

NEW YORK -- Ericsson Capital Markets Day -- Ericsson's CEO says that the Cisco and Ericsson partnership is unlikely to meet its sales target of $1 billion next year but that the pair will continue to work together.

"We're probably not going to meet the target of a billion in 2018," Börje Ekholm told Light Reading Wednesday, reaffirming a statement he'd made at Ericsson's Capital Markets Day earlier. But in a brief interview, he insisted that Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC) will continue to work together on the pact.

"There's no change in the partnership," he told Light Reading. Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC) formed the partnership two years ago to jointly work on 5G, IoT, Cloud and NFV, forecasting $1 billion in incremental revenues for each company by 2018. The pair honed the focus of the partnership in 2017. (See Cisco & Ericsson Forge Killer Partnership and Cisco & Ericsson Hone Their Partnership.)

"We need partners who have end-to-capabilities, which is why we need to work with Cisco," Ekholm said.

The CEO is promising a "robust plan for 2020" to turn the Swedish vendor around. Nonethless, Ericsson sees slowing RAN sales ahead of 5G, the need to revamp its digital services business and the strength of the Swedish Krona as a drag on the business.

Ekholm said in a longer interview with Light Reading that he is not expecting "significant" revenues from 5G in 2018 or 2019.

Ericsson is forecasting a drop in overall revenues to SEK 190 billion to SEK 200 billion ($22.7 billion to $23.9 billion) by 2020, compared to SEK 211 billion ($25.2 billion) in the last 12 months.

— Dan Jones, Mobile Editor, Light Reading